Students are often too busy to worry about loan consolidation. But after graduation, when student loan payments become due, student loan consolidation becomes even more important. Unfortunately, the loan consolidation process can be overwhelming for some. This page seeks to inform students of their options.
If you don’t consolidate your student loans, you are missing out on a number of benefits.
Student Loan Consolidation Benefits
By consolidating your student loans, you can benefit in a number of ways. Most peoople think they should shop for the best interest rate when consolidating their student loans. This isn’t entirely true. All lenders use the same interest rate when consolidating your federal student loans, but some lenders offer discounts once you start paying on your loan.
Student Loan Consolidation Discounts
The student loan discounts include a discount for timely payments over a period of time, such as timely student loan payments for the first six months of your student loans.
Student loan discounts may also include a rate reduction for setting up automated payment from your bank account. These discounts can become substantial over time, making student loan consolidation a popular option for law students after graduation.
Finally, law students benefit from loan consolidation if they have multiple student loans with multiple lenders. It is inconvenient to make payments and receive bills from multiple student loan lenders each month. By consolidating, you can reduce the headache of all this paperwork.
Disadvantages of Student Loan Consolidation
There are a few reasons not to consolidate your student loans.
More Interest Due for Extended Repayment Periods.
If your loan consolidation allows you to pay less each month, you are probably extending repayment period of the loan, and this may increase the total interest charged on the loan.But you don’t have to extend the loan repayment period when you consolidate. This is merely an option, but you should know the consequences if you choose this option. In short, you can reduce your payments now, but you will pay more interest in the long run.
- Grace Period. Borrowers who consolidate in the grace period will lose any grace period that would otherwise remain if they had not consolidated their loan.
Rate Decreases. You would not want to consolidate your student loans if
- your student loans are on an adjustable interest rate, and
- that interest rate is going to go down. If the interest rate is going down, you would want to wait until it went down to consolidate your student loans.
Generally, there really is no reason not to consolidate your loans, unless (1) you are within a grace period because you graduated in the past six months or so, or (2) you believe the rates on your student loans will decrease in the future, so you want to wait to lock in at a lower rate.
Student Loan Consolidation Interest Rates
As you might imagine, guessing the rate increases and decreases is part science, part witchcraft. For this reason, many law school graduates consolidate within the first year or two after graduating from law school. It makes sense to lock in a fixed interest rate so you know what you will be paying, reduce the law school student loan bills you receive, and hopefully benefit from some other discounts offered by student loan consolidation lenders.
Student Loan Consolidation Lenders
For law student loans, I use and recommend Access Group because its loans have no fees, plus it offers discounts after graduation for timely payments and automatic payments. I doubt there is a better place for law students.
Of course, there are many quality online lenders that offer student loan consolidation, and I recommend you compare what they have to offer to find the best program for you.
My Student Loans
The U.S. Department of Education offers a website where students with student loans in the United States can see a list of all their student loans. Students with a lot of student loans are often confused about how many loans they have and which lenders their loans are with. This website is a great way to find out what student loans you have and which lender you used for each student loan. Visit My Student Loans to find out more.