Student Debt Consolidation Loan - The Advantages and Disadvantages

As valuable as higher education is, it is very expensive and not within everyone’s reach. Everything has to be paid for - from accommodation to tuition fees and books. In achieving your dreams and going to the university you’ve always wanted to, student loans come in handy. Their interest rate is lower than the normal interest rate and the repayment time is also much higher. A lot of times, we take more than one student loan to help us with our fees during college. Paying up the interest for different loans is a daunting task and student debt consolidation loans come in handy. A student debt consolidation loan is a loan in which all other smaller student loans are merged into one big loan. The student then has to make one payment every month. Also, there is only one repayment period and one due date to make the payment. The interest on the loan is also significantly lower and you can save you money monthly. Student debt consolidation loans are of two types - federal student consolidation loans and private student consolidation loans. The advantages of student debt consolidation loans: 1. The interest rate on the loans is fixed and it has a much lower rate of interest than the combination of other loans. 2. There is just a loan to pay off thus making remembering the due dates easy. 3. There is an extended time of repayment of the loan and this can be up to 30 years. 4. The time frame to pay off the loan increases while the amount that needs to be paid off every month also reduces significantly. 5. There is no need to pay any extra fee to consolidate these student loans. 6. The loan application process is also much simpler and no penalties exist for  paying back early as well. Disadvantages of the student debt consolidation loans: 1. Extended payment periods make it seem that little payment is flowing out of your account but you will end up paying much more than you borrowed. 2. The rate of interest is higher in the consolidated loan than the other individual loans sometimes. In this case taking a consolidated loan is more of a disadvantage. 3. When taking a consolidation loan, consider the remaining tenure on your various loans for the purpose of consolidating your payments into one. If most of your loans are nearing the tenure completion, you would not gain from consolidating such loans. 4. Consolidating the loans within the grace period will require you to pay it off immediately. A lot of students have been helped by student loans in pursuing their dreams to become what they are today and student debt consolidation loans helped them lessen the financial burden to a large extent.  The pros and cons must be evaluated carefully before deciding to consolidate the student loans.