Advantages and disadvantages of consolidating student loans
Your grace period on some loans could end prematurely, or you may end up consolidating at the wrong time – too early or too late.
Not all student loan debts can be consolidated, although most federal loans can.
Even a little bit of savings each month can add up to a lot, over the lifetime of your loan.
At Earnest, we save our clients an average of ,936. Paying less in interest goes hand-in-hand with paying off your total debt quicker, because more of your payment will go toward the principal, bringing your interest amount down further each month.
Sometimes, you can fix a lower interest rate to that single payment than the average rate that you were paying on your other multiple loans, which is especially beneficial if you are able to turn variable rate loans into a single, fixed, low-interest rate loan.
Here’s when confusion can arise: part of refinancing includes consolidating your loans, if you’re refinancing more than one loan.
If you’re on the fence about whether or not to consolidate and refinance your student loans, here’s a list of pros and cons to help you think it through: You can pay back your loans on your own timeline.
And who wouldn’t want to be done paying student loans sooner? When you refinance and consolidate student loans with Earnest, you can skip a payment when finances are tight, make an extra payment if you have a windfall, and set your own payment due date.
We never charge fees or impose penalties for letting you fit your payments to your budget and your life. If you have certain perks tied to your original federal loans (such as interest rate discounts, principal rebates, or some loan cancellation benefits) you could lose them when you consolidate or refinance your loans.
You are likely to lose any grace periods that your loans currently enjoy after a loan consolidation, meaning that you have to begin making payments immediately.