topic Re: Question about Loan Consolidation in Student Loans

Question about Loan Consolidation

Anonymous — Sun, 29 Nov 2020 15:52:22 GMT

Hi,

Had a question about loan consolidation. I seem to have all my loans under one servicer right now (MyFedLoan) and I am most likely going with the graduated 10 year repayment plan. Does it still make sense for me to consolidate? Since all my loans are already under one servicer is there any benefit?

Thank you!

Re: Question about Loan Consolidation

chiefone4u — Sun, 29 Nov 2020 17:51:26 GMT

*I'm not an expert, and didn't bother to consolidate or refinance my student loans.*

My understanding of consolidation of student loans is to:

a). Make all payments to the same servicer.

b). Reduce the total number of loans outstanding (I have two, several on here have 10+ loans).

c). Lower interest rates (I've considered this as I qualify for 2.?% and currently loans are 5.6% and 6.4%. Haven't bitten as my loans are over 10 year's old now and will be paid off in 2021).

If any of the above make sense to you, then consolidation could make sense.

While this doesn't exactly answer your question, it should give you an idea of what I see as reasons to consolidate.

Re: Question about Loan Consolidation

Anonymous — Sun, 29 Nov 2020 20:47:20 GMT

Yea that's what it says online...but if all my loans are under one servicer, is there any benefit? My understanding is that the loan interest rates would be averaged not necessarily would be lowered.

Re: Question about Loan Consolidation

Anonymous — Mon, 30 Nov 2020 04:27:16 GMT

@Anonymous wrote:
Yea that's what it says online...but if all my loans are under one servicer, is there any benefit? My understanding is that the loan interest rates would be averaged not necessarily would be lowered.

I see no benefit ro it unless you want to change to a different payment program that requires it. Generally this is for much older loans.

You are correct about loan averaging.

It would be a new account that would further lower your AAoA and you would get hit with a new account penalty for a bit.

I honestly see no reason to consolidate your SLs with the same servicer. If for some reason the payments are not all at the same time (would be unusal, they usually only require one payment even across many loans and split it up accordingly), you could always request that the payments be on the same date and if necessary ask for 1 payment.

Re: Question about Loan Consolidation

calyx — Mon, 07 Dec 2020 16:23:30 GMT

I usually encourage people not to consolidate unless they're having trouble keeping up with their student loans (servicers usually do the dirty work of splitting payments amongst loans). Not only will you reduce your AAoA and AoYA, but having more student loans (which are usually amongst the oldest tradelines people have) on your credit report as long a possible can help your scores when applying for new credit.

And, as horrible as it sounds, it's nice to keep consolidation as on option on the table when you get into a sticky situation (like, say, a second default).