There are many good reasons to consolidate your student loans. However, there are other factors that borrowers will need to consider before making their decision.

First, on the positive side. You’ll simplify your life with one monthly payment that will come from one lender (and one point of contact if you have any questions). Because you are extending your loan’s term (or how many years it’s going to take to pay back your consolidated loans), your monthly payment will be lower. That’s where the term “payment relief” comes from.

Loan terms range anywhere from 10 years all the way up to 30 years. And the interest rate on a federal consolidation loan is fixed—which is unlike variable interest rate loans that can change. Your consolidated loan’s interest rate will be equal to the average of all the student loans you want to consolidate, which is then rounded up to the nearest 1/8 percent. The maximum rate your loan can be is 8.25 percent.

Pros & Cons
Positive +

• One monthly payment (one stamp!)
• One lender to contact
• Lower monthly payment (more cash for food!)
• No fees
• No credit checks
• No prepayment penalties (so when you win the lottery, you can just pay it all off!)
• Borrower benefits or “Goodies” – cash back, reduced rates

Negative –

• Takes longer to pay back (hopefully before your kids go to college)
• Total cost of the loan is higher
• Locked interest rate = if rates go down, your rate won’t change
• Lose benefits (if any) from previous loans