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Beware of the student loan consolidation temptation

By Jan Miller

For the Deseret News

Published: Thursday, April 11 2013 9:10 a.m. MDT

3. You may diminish the amount of repayment assistance you qualify for. When you consolidate, it becomes a new loan with new rules. Consolidation loans have different qualifications for certain repayment options. Keeping your loans separate for the appropriate time frame can provide greater flexibility in your repayment assistance.

How this applies to you depends specifically on your individual situation — not only on the details of all your loans, but what your financial circumstances and plans are as well.

If you choose to consolidate

If, after reading these tips, you still believe that consolidating your federal student loans is right for you, your first choice should always be to do so via the Direct Loans Consolidation Program.

There are no additional costs for consolidating through this program, and you’ll be able to keep your eligibility for the substantial multitude of federal repayment assistance options like deferment, forbearance and income-based repayment plans.

Another boon of consolidating via the Direct Loans Consolidation Program is that your credit score will not be a determining factor as to whether you qualify. This program offers very flexible eligibility in general, particularly toward creditworthiness.

Understanding your options and the impact that federal student loan consolidation will have on your loans is crucial when trying to make the best decisions for your financial future.

Remember, this act is not a quick-fix solution that meets everyone’s needs. Make sure you speak with a trusted professional who can guide you to the best possible decision with regards to repaying your federal student loans.

Jan Miller is a student loan consultant & founder of Miller Student Loan Consulting, a company that creates customized student loan repayment plans that fit each borrower's unique budget & life. EMAIL: info@student-loan-consultant.com

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