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Is it wise to consolidate your student loans?

Many college graduates in Florida have trouble keeping up with their student loans. Not only are many Florida residents carrying very significant amounts of student loan debt, but they also often have 10 or more separate student loans, making it difficult to keep track of payments. Some people who have such difficulties may consider student loan consolidation.

Before applying to consolidate student loans through the federal Department of Education, or through a private company, it is very important for Orlando consumers to understand and evaluate the risks and potential benefits.

The main benefit of consolidating student loans through the Department of Education is likely that it allows consumers to combine numerous loan payments into one. Consolidating loans can also provide consumers with more repayment options, which may make it easier for Orlando residents to afford their student loan payments. It might also be possible to obtain a lower interest rate.

One of the negative consequences of consolidating student loans is that it may make the loan more expensive over time, because consolidation often involves stretching 10-year loans out over 15 or 30 years, which results in additional interest. Those who might be considering consolidating student loans through private firms could be in for a major risk, as many of these companies have terms that are very unfavorable for consumers, ultimately leading them into far more debt than they had before consolidation.

Those who are considering student loan consolidation need to do their research. Debt consolidation is often appealing to those who are struggling with debt because it can lead to lower payments, but unfortunately it may not help them get out of debt.

While student loans generally cannot be discharged in bankruptcy, those who are struggling with student loan debt do have options. In some cases, it is possible to apply for deferment, forbearance or even loan forgiveness. Those who are struggling with student loan debt may benefit from talking to a reputable debt relief attorney about their options.

Source: U.S. News & World Report, "Should You Consolidate Your Student Loan Debt?" Abby Hayes, Jan. 24, 2014

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