Financial Planner Q&A: Should I Consolidate My Student Loans?

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We’ve discussed various aspects of student loans before on the SaveUp blog (Financial Planner Q&A: Should I Use Income Based Repayment For My Student Loans?, Paying Off Student Loans: A Personal Perspective, Don’t Let College Break the Bank: Tips to Save on Student Loans), but today’s post is all about student loan consolidation.

Where to start?

Debt can feel overwhelming, so the first step is to get organized. I create a spreadsheet for clients that includes the following details for each loan (at the very least): the loan type, current balance, original balance, the percentage rate and whether or not it is variable, when the loan is due and creditor’s contact information. Gathering this information will help you devise a payoff schedule and assess if you have the types of loans that can be consolidated.

What is the best way to handle multiple student loans from different lenders? is a great resource to assess multiple loans and play with variables of paying one off sooner than the other. If you have various interest rates, depending on the amounts of each loan you might be able to devise a more effective pay off strategy than loan consolidation.

When it comes to consolidating, its important to understand that not all repayment plans are alike. Federal Student Aid breaks down the options to help you choose one that is right for you. Depending on the amount you owe, you might be eligible to extend payments. This will lower your monthly payment amount, but you might pay much more in interest over time.

Assess how much the new payment would be under consolidation. This online calculator can help you figure that amount.  Then answer these questions: Would the new payment be a more affordable amount on a month to month basis than your other options? How long will you have to pay? Now that you have some basic knowledge about this important decision, here is a quick breakdown:

The Pros of Student Loan Consolidation

1. Simplification – When you consolidate your loans you’ll basically have one new loan. That creates greater simplification. Now you have one balance, one payment, one interest rate, one timeline so its easier to keep track.

2. Affordability – Consolidating loans and reducing your monthly payment makes debt more affordable on a monthly basis.

…And the Cons of Student Loan Consolidation

1. Paying More – You could pay much more in interest over time if you consolidate your loans. This is particularly true if you choose a longer repayment schedule.

2. Permanence – Once you consolidate you can’t unconsolidate. You’re making a permanent decision. If you later realize it would have been more effective to pay off your higher interest rate debt first, you don’t have the option to go back and change things. You don’t have the option of paying off different loans in an order of your choosing which might be a more effective repayment strategy

3. Reduced Flexibility – Depending on your loans, you might have more flexibility from your current lender than if you consolidated your loans.

Get organized and run the numbers on your own debt. Consider your repayment options in conjunction with your other financial goals so that you can SaveUp!

This post was written by SaveUp’s personal finance contributing writer, Catherine Hawley, CFP®.

Image source: Consumer Reports

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Written by Catherine Hawley

Catherine is a CERTIFIED FINANCIAL PLANNER (TM) who offers accessible and objective financial advice to individuals and families. Her aim is to help clients gain clarity and confidence so they can pursue their definition of financial success. You can find more information about her independent practice at She has worked at Rhodes & Fletcher, LLC as a Personal Benefits Specialist and at the firms of Bernstein Global Wealth Management and Barclayʼs Global Investors. Catherine has a bachelors degree in communication studies from the University of California, Los Angeles where she was a scholarship athlete and captain of the womenʼs tennis team.