This site is now an "Amazon Associate", we earn from qualifying purchases.

Pros and Cons of Student Loan Consolidation

student loan consolidation

Consolidating the loan means refinancing it. As a student, you should be aware of your priorities and affordability. Loan consolidation may be very beneficial for some students, but at the same time, it may not be a good idea for many. Here are some pros and cons of consolidate student loans.


  1. Consolidation is useful because it allows the student to put all the payments in one single payment. The consolidation loan is used to pay off the other debts and then you have to pay only one lender. This simplifies the process of paying off the debt. The purpose of introducing the student loan consolidation system is to make the borrower take multiple loans from one servicer.

  2. The loan consolidation also enables the person to extend the repayment period if he is not able to afford high monthly payments. This flexibility of the loan makes it extremely useful.

  3. The loan consolidation that comes with variable interest rate also gives you interest breaks in specified periods. The variable interest rate starts with a very low-interest-rate due to which, the borrower can save a lot.

  4. The loan consolidation allows you to keep your credit score good. When you can pay on time and lower your credit card balances, you automatically get the good credit score. Having a good credit score enables you to avail low-interest rate feature at next loan consolidation.

  5. The borrower will have to make low monthly payment. Because of refinancing, you will be able to pay off your debt at the low-interest rate. Because of low-interest rate, you will have to pay low monthly payment. It also enables you to save money. Because of the ease of payment, the borrower finds it easier to pay the money each month. This makes his credit history good, and he improves the credit score. The good credit score, in turn, secures him low-interest rate consolidation loan.

  6. Keeping track of multiple payments can be confusing. You may also forget to pay the money which will consequently ruin your credit score. Single big payment instead of many small payments never let you forget anything about the debt.


  1. Having your loan consolidated may make you lose all the benefits that come with the loans that you have combined into a single loan.

  2. With the loan consolidation, a student has to pay higher interest. In trying to lower the monthly payments, one extends the repayment plan which ultimately increases the interest rate.

  3. The consolidation loan as told earlier extends the repayment period. One has to pay over a longer period with this loan. The student ends up paying a lot for this time duration

  4. The reality of variable interest rate is not what you think. You may be very happy in the start when the interest rate will be low. However, the interest rate tends to increase gradually.

Peer to Peer Lending and Private Lending Info