So you have finished school. The payment notices start arriving and you have not even found a good job yet. Now what? Student loan consolidation may be helpful for you to get control of the payments and eliminate the need for tracking several different accounts.
When considering this options there are many things to pay attention to. First there are some that are not able to be consolidated. NelNet and Sallie Mae are two of the common servicers for this type of lending. Instead of using a combination, you may consider working with the servicers to get things under better control.
If you find yourself in trouble with these payments, contact the lending institution to work out arrangements. For many deferments and forbearance are available to put off repayment longer which allows you more time to find suitable work. If you find that the time period is not long enough still, request again. Most time these requests are granted.
The impact that this type of financing has on your credit score is tremendous. Keep in mind that each payment that was made to your school reflects a separate line item. So if you are receiving them four times a year, that’s usually four or eight line items, sometimes more. So for every late payment you could receive four or eight negative marks on your record. It does not take long for this to add up to a very bad outcome.
If you are successful in combining the financing into one bulk amount, it will reduce the number of hits your report will take if you fall behind or are late on a payment. This is one positive aspect of this option. However you will find that there are negative consequences to this process as well. For one you will likely lose the guaranteed lower fixed interest rate that is usually provided.
Incentives are also offered by companies doing the consolidation. Most will offer a certain amount payable after a number of payments are received on time. This sometimes provides enough to make up for the increase in the interest rate as well.
The decision to combine or not to combine is a personal and individual decision that every person must consider carefully. There are many pros and cons for each side. It is important to remember that once the decision has been finalized and the loans are put together that it cannot be undone.
Tips and advice on student loan consolidation now in our guide to all you need to know about federal student loan consolidation .
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