Student Loan Debt Consolidation – Pros and Cons

December 11, 2011 – 7:49 am

If you are considering to get student loan debt consolidation, this means you are finding it hard to stay ahead or at least keep up with your monthly loan repayments. This is especially true if you have several creditors at your back.

Before consolidating your debts, what are the things that you have to consider?

As with any other decisions that you have to make, you must take the time to weigh all your other options or if you have already decided on pursuing this method of debt repayment, at least be aware of the pros as well as the cons.

What are the advantages of student loan debt consolidation?

• Deferment and forbearance. In case you experience financial difficulties, you can still request to delay your payment for up to three years. This is possible even I you have already taken advantage of this previously.

• Single repayment. You combine all your current loans to one manageable and affordable monthly payment.

• Student loan repayment term extension. The extension of the loan term allows for lesser monthly payments.

• Avoid charges. With a single payment every month, you are more likely not to forget so you avoid getting penalties

• Flexibility. You can repay your debts when money becomes available to you.

What are the disadvantages of student loan debt consolidation?

• Credit scoring. If you have bad or poor credit history, you are more likely to be denied when applying for debt consolidation with a bank or other private financial institutes.

• Government assistance. Debt forgiveness opportunities the government offers may be lost when consolidating with a private lender.

cosigners. If borrower has poor credit score, he needs to get a co-signer and that person also becomes responsible for paying off the debt in case the borrower defaulted.

• Grace period. Debt consolidation disables the grace period usually given to students after graduation before repayment starts.


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