The following is a post from Jon at Pay My Student Loans where he writes about how to manage student loans after graduation to ensure they don’t control you!

Consolidating student loans is one of the key tools to avoiding becoming another statistic in the trillion dollar student loan crisis that is currently plaguing the country. Student loan delinquencies have now exceeded credit card delinquencies for the first time ever (CNBC article). This heavy debt hanging over the heads of students has hindered graduates from obtaining the most fulfilling jobs they can and instead made them slaves to the highest paying job they can find.

So what are some steps that can be taken to ensure that one doesn’t fall into this debt trap? One option is student loan consolidation.

This is where a new loan is obtained to pay off older loans, so that only one fee is paid to one company, rather than many fees to several different lenders. This is very helpful for students who have obtained multiple loans during their college life. The other significant benefit of consolidation is that you can extent the time it takes to pay back the loan and therefore not have to pay as much every month.

Federal loans and private loans can not typically be consolidated together however if you have multiple private student loans than you can consolidate them together using any of these private student loan consolidation companies listed here.


Simplify Your Monthly Payments By Consolidating


4 Consolidation Benefits

Consolidation can provide several different benefits for graduates, depending on his or her circumstances. Consolidation can be useful for graduates who:

  1. Are in default. This is very beneficial, as a student who is in default is unable to obtain new loans to go back to school and may face a number of collection procedures that can be stressful. However, a graduate should be wary if he is in default when he consolidates, as collection fees will be added to the amount of monthly payments.
  2. Want to make only one payment a month. However, it should be kept in mind that because the consolidation is covering a number of other loans, it may take longer to repay and, over time, could result in spending more money in the long run as interest rates increase over time.
  3. Want a fixed interest rate on variable interest rate loans. This makes it easier for the graduate to handle his financial situation, as he will not have to memorize the variety of interest rate percentages to ensure he’s paying the right amount to each lender.
  4. Want their loans to be eligible for Public Service Loan Forgiveness. This is for those graduates who have made 120 monthly payments and are working for a non-profit organization, a private organization that provides a public service, or the graduate has a position in AmeriCorps or Peace Corps.

To get help getting the rest of your finances under control try the free spreadsheets listed in TheGreenPandaTreeHouse post here.


3 Disadvantages of Consolidating

There are a few downsides to student loan consolidation that should be kept in mind…

  1. Consolidation is not a good idea for those graduates who are already close to paying off their student loans. Doing so will make it more expensive for the loans to be paid off.
  2. If a student consolidates his loans while he is still in school, then he will lose his grace period for the first payment. This means that he must start making payments as soon as he has graduated, which can be difficult to do if he doesn’t already have a job lined up.
  3. The major downside already discussed is that it will take more time to pay off the consolidated loan, and therefore, could become more expensive over time.


Depending on each graduate’s financial situation, student loan consolidation can be an important tool to control your student loans.

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Mike, aka The Dividend Guy, authors The Dividend Guy Blog since 2010 and manages portfolios at Dividend Stocks Rock. He is a passionate investor.