Now-a-days it has become harder to even imagine completing education without obtaining loan. Students have to take loans for fees of the institute, tuition fee, and expenditure on clothes, books, lodging, and board, educational equipment such as the drawing board, entertainment, shoes, bags and other expenses. They repay it at the time when they are well established and placed on their jobs. There are some pros and cons of student loan consolidation. To show you both sides of the picture the pros and cons of student loan consolidation are gives below;
Pros / Advantages of Student Loan consolidation
- It allows students to complete their education without any tension of financial expenses.
- If you have taken many of the student loans as per your time to time money requirements, you can apply for Student Loan Consolidation. Consolidation of $100,000 loans can save $500 per month.
- Student Loan Consolidation not only saves your financial cost but it can also give you a longer period of paying back the debts. By converting your student loans into one student consolidated loan you can lengthen your repayment period by 10 to 20 years.
- You can get tax credit on federal loan consolidation program of educational loans.
- Fixed interest rate allows you to make better future planning and provides certainty. This certainty allows you to concentrate your mind on your task.
- Timely payments to your lender, improves your credit ratings.
- You do not need to maintain the records of several loans that you owe. It also reduces the mental stress associated with payment of several debts.
Cons / Disadvantages of Student Loan Consolidation
- If you do not qualify for federal student loan consolidation program, you will have to consolidate your loan from financial sector which will charge market rate. It means there will be no subsidy available for students.
- Tax credit is available only if you consolidate your loan from federal student loan consolidation program.
- By lengthening the time period of repayment of debts, you actually increase the amount of interest that you pay.
Broad and complete analysis of pros and cons of student loan consolidation will allow you to say that it is the real golden opportunity for the students to complete their education as well as get lots of benefits of consolidation.