Loan Consolidation Can be a Smart Move for Current Students

Wittenberg University’s Kristyn Russell is not going to wait for student loan debt to overwhelm her or even hang over her head for a second. Much like in the rest of her very busy life, Russell took charge and made the financially responsible decision to consolidate her loans early and lower the amount she’ll have to repay.

Just like many graduating seniors, Russell would have been faced with the huge task of repaying the $17,000 in loans she has accrued during her time at Wittenberg in Springfield, Ohio. According to the 2003-2004 National Post-Secondary Financial Aid Study, two-thirds (65.6%) of undergraduate students graduate with some student loan debt, and the average federal student loan debt among graduating seniors is $19,202 (Stafford and Perkins Loans). Most students are not well-educated on the facts about consolidating loans, such as getting and retaining a fixed interest rate, extending the life of their loans and lowering their monthly payments.

Spotting a Student Loan Consolidation “Gotcha” will save your money, and your butt

If you are a soon-to-be or recent college graduate, you’re probably receiving a lot of information about consolidating your student loans. As a result, you may be asking yourself, “Why should I consolidate my loans?”  The answers are simple:

You can get a fixed interest rate on your loan;

If you have multiple student loans, you can lump your loans into one easy payment made to one lender; or

You can lower your monthly payments by allowing more time to pay back your loan.
An important part of consolidating your loans is learning about the benefits that companies offer.  Unfortunately, many times when you receive a consolidation flyer in the mail, it’s filled with promises of reduced interest rates, or includes fine print that allows the lender the right to change or take away the benefit.  We call these promises and fine print “gotchas.”