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Should You Consolidate Your Student Loans?

Does consolidating your student loans really help?

Consolidating your student loan means combining multiple student loans into one single loan. It is done to make repayment of loans simpler, as you only have to make a single monthly payment to a single lender. You don’t have to worry about making multiple payments to multiple loanees, all with varying rates and amounts.

It can be beneficial to most, but without understanding all the key points about consolidation, it could end up costing you more. So, should you consolidate your student loans? Let’s take a deeper look.

To start, there are two ways you can consolidate your student loans. The first is direct consolidation, which is for federal loans, and the second is a private student loan refinancing for private loans.

Direct consolidation not only makes repayment much simpler and manageable. It is also a good way to access different loan repayment plans, borrower protections, and forgiveness programs. At the same time, refinancing federal and private loans could mean losing consumer and borrower protections and loan forgiveness opportunities specific to federal loans.

Note: Direct consolidation of your federal loans from the Department of Education is free of cost. Stay away from companies asking for fees to consolidate your loans for you.

Reasons Why You Should Consolidate Your Student Loans

Simplifying your repayments: Most students have multiple loans with different rates and periods from different lenders. Combining them all into one greatly simplifies your repayment into a single monthly bill to one lender.

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Lower your monthly payments: Consolidation can lower your monthly payments by extending the period of your repayment to up to 30 years.

Protect your credit score: Missing bill repayment really hurts your credit score. When you only have to worry about one bill payment every month, it is much easier to keep track of. This can also lower your chances of missing repayments, thus helping you protect your credit score.

Why You Shouldn’t Consolidate Your Student Loans

You might end up paying more: While consolidating lowers your monthly payments, you will end up paying more interest over time in the long run.

Losing benefits: Consolidating your federal loans could mean you lose benefits like interest rate discounts, loan forgiveness, and deferment options. Federal loans also offer income-based repayment plans, which you might not be able to take advantage of after consolidation.

Lose the ability to pay off individual loans: Once your loans are consolidated, you lose the option of paying off individual loans to lower your monthly payments.


You should consider consolidating if you struggle to keep up with multiple monthly payments. With private consolidation, you might even be able to lower your interest rates. Consolidation lets you decide on a period of repayment. This could end up costing you a lot more in the long run. However, it may result in the repayment being more affordable monthly.

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In our opinion, if you are making enough money to repay your loans with the standard repayment methods, it is best to follow through with them. Ultimately this is the fastest way to be free of debt.

Written By

Riley is a finance, lifestyle, and entertainment writer living in San Diego. He received his bachelor's degree in Journalism and Multimedia from the University of Oregon. His work has been featured in many finance and lifestyle publications throughout the US. When he is not writing, Riley enjoys reading and hanging out at the beach with his dog.


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