benefits of student loan consolidation

If you have ever thought about consolidating your student loans, now is the opportune time. Consider the following benefits of student loan consolidation to help you make a decision.

Lower monthly payments. Depending on your specific loan situation and which lender you go through, you may be able to lower your monthly payments by up to 54%.

Fixed interest rates. While the rates on Federal Stafford and Federal PLUS loans vary each year, the interest rate on a federal consolidation loan is fixed for the life of the loan. The interest rate on your student consolidation loan would be a weighted average of the interest rates on your eligible loans rounded up to the nearest 1/8th of a percent.

Simplified loan payment. When you consolidate your student loans, you only have to make one loan payment each month to one lender. This would be very beneficial to you if you currently make payments to multiple lenders each month.

Extended repayment period. If you have a lot of student loan debt, a federal consolidation loan may allow you to extend the repayment period. Depending on your loan balance, you may even be able to extend your repayment period up to 30 years. However, keep in mind that a longer repayment term also means you pay more interest over the life of the loan.

Life-of-loan servicing. Some student loan companies offer life-of-loan servicing, which means that the servicer will guarantee to never sell your loans. You will remain with that servicer for the life of your loan. Be sure to research student loan companies to see which ones offer this benefit.

Possible borrower benefits. Some loan consolidation programs give borrower benefits, such as auto-debit payment reduction and consecutive on-time payment reduction, that can enable you (if you are qualified) to save up to an additional 1.25% off your interest rate.