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Reasons Not to Consolidate Your Student Loans

When you consolidate your student loans you get significantly lower monthly payment fees and your monthly interest rates are also lowered. When these are a great help in managing your monthly budget, there are also disadvantages to consolidating your debts.What are the cons of college loan debts consolidation?You will end up paying for more than the overall cost of your loans. Why is this? When you consolidate your student loans your repayment term is extended so that your monthly payment and interest rate are lowered. But if you sum it up, you will actually be spending more instead of saving, and if your repayment term extends up to 30 years, imagine how much you will be losing.There are also some helpful borrower’s benefits that you might lose if you consolidate. These benefits include interest rate discounts and rebates. Federal loans can allow you to apply for payment deferment in case you decide to go back to school or loan forbearance if you encounter economic hardships. These benefits could be lost if you consolidate especially to a private lender.Since debt consolidation interest rate is the weighted average of your various loan rates, there is a possibility you’ll end up paying for a higher rate than if you pay your loans separately. This happens if you consolidate a high rate loan with other low rate loans.Consolidate your student loans only if you don’t have any other options. If you have mostly federal loans, check with your lender of college if you qualify for loan forgiveness. This is possible if you can work as a teacher, doctor or lawyer in low income areas in the U.S. If you belong to other professions, then perhaps you can do volunteer work for the Peace Corps or Americorps to lessen your college debts.

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