Debt consolidation loans

service professions or subject areas or in certain designated low income schools.
Portions of a Stafford Loan may be eligible for cancellation if you teach full time for five consecutive years in a low income school. (Under certain circumstances, this option may also be available for consolidation loans.)

• Your current lender offers rebates (such as an annual reduction in your interest rate) for successive on-time payments. You would lose this option if you consolidate and, as previously mentioned, lenders may be phasing out incentives for consolidation loans.

• You consolidate during your grace period(s). The remainder of your grace period is lost.

• You've already substantially reduced the amount you owe. Because consolidation generally extends your repayment period, often with an increased interest rate, you may ultimately end up paying more.

Research and Conquer
Unfortunately the answer to whether or not consolidation is right for you is…"it depends." To find out, collect information about what federal loans you have (Perkins, FFEL, PLUS, and Direct Loan programs) by accessing the National Student Loan Data System (nslds.ed.gov). Collect information about any private educational loans you have directly from your lender(s). Take the loan information and find an online consolidation loan calculator to help you determine how your loan repayments may change through consolidation.

Then ask yourself the following questions:
• Am I willing to pay higher interest or extend my repayment period and pay more interest over time?
• Am I going to lose any loan cancellation options or incentives for which I'm currently eligible?
• Can I afford my current payments without consolidating?
• Would consolidation actually make my payments significantly more affordable?
• Does the 'lower payment now' benefit offset the 'pay more for longer' downside of consolidation?

You can see that the decision whether or not to consolidate is not black and white. It is an individual decision--it may work for some and not for others. Because there are long term implications to consolidation, do your research and weigh the pros and cons carefully. When all of the evidence is in, you should be able to decide whether or not a consolidation loan is the answer for you.

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