Should you Consolidate your Student Education Loans?ReviewAdvice

Should You Consolidate Your Student Education Loans

Student loan debt is a common problem for college graduates in the US and its always growing. In fact, you might start having to pay for your kid's college tuition as soon as you've paid off your own and it will be a lot more expensive. Consolidation is a common way to deal with debt but what does it mean to consolidate debt? Consolidation refers to the combining of multiple debts as a way to simplify your payments into one manageable amount. Plus, instead of paying interest on multiple debts, you only pay it on one.

What can you consolidate?

Several types of loans can be consolidated but some are easier than others. Federal loans are the easiest types of loans to combine; this includes Perkins and Stafford loans. Loans from some other organizations may be qualified for consolidation but private education loans are not typically eligible. If you combine several loans they will get less money on interest. However, many student loan providers offer consolidation service as well.

Should You Consolidate Your Student Education Loans

Will consolidation hurt my credit?

Consolidating multiple loans with absolutely affect your credit. There is a part of your credit score that is affected by the amount of credit used and the amount of credit available. When you close a line of credit, your available credit goes down and throws off your ratio. Closing multiple loans to consolidate them into one payment may cause a notable difference. However, faithfully paying off what you owe can be good for your credit. It depends on how much you owe and how much you consolidate but it will definitely cause a change in your credit score but it may be temporary.

How to consolidate?

If you do decide to consolidate your student loans there are several ways you can do that. Many of the top lenders offer consolidation service as well as loans. Companies like Nelnet can consolidate federal loans or help you manage your federal loans.

You also have the option of using a federal direct consolidation loans to combine debt. This type of loan lets you pay off your other loans by borrowing from the US Department of Education. Repayment is typically more flexible than other types of loans. There is even one option to base monthly payments on your income. If you don't like your method of repayment you can change it at any point.

Other important features include:

  • No minimum or maximum amounts.
  • The combined monthly payment maybe be less than many separate loans
  • This is only for education loans


Consolidating loans should be a last resort, used only when you can't handle your student loans in a practical way. Consolidation always has the potential to harm your credit but, on the other hand, paying off your debts in a reasonable amount of time may be worth the risk. Do your homework to find out if it is right for you.

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