Consolidation of Student Loans

Consolidation means combining several types of federal education loans into one NEW loan. If you have student loans, you've probably received multiple phone calls, letters, and e-mails about consolidating those loans with one lender or servicer.

Here are some reasons why you should or should not consolidate.

Pros

• Fixed rate for entire loan.
• Lower, more manageable, monthly payments.
• Make payments to one lender.

Cons

• Your repayment term may be extended up to 30 years which means you will pay more interest in the end.
• Consolidating your federal education loans has fewer deferment, cancellation and forgiveness options than your original loans.
• In some cases, consolidations can double your total interest expense
• If you consolidate your loans while you are still in school and decide to borrow additional loans, the new loans will NOT be included with the consolidation loans, which means you will make multiple payments when you graduate.
• When choosing to consolidate, you are foregoing (waiving) your grace period and repayment will begin immediately (unless you request a deferment or forbearance). The final decision is up to you.

For more information regarding consolidation call your lender or call Texas Guaranteed Student Loan Corporation at (800) 845-6267 or visit them at http://www.tgslc.org/borrowers/consol.cfm.

In order to find out whom your Stafford loan holder is you can go to the National Student Loan Data System and select the Financial Aid Review link. You will need your Department of Education PIN (the same one you use to fill out the FAFSA on-line) to access the database. You can also usually find information about your loan holder(s) at the Adventures in Education site.