4 Responses to “what is loan consolidation ? is it helpful for an international student ?”

1. marebear31485

   If you are consolidating your federal loan with another federal consolidation company there are a few benfits and many disadvantages. There are no actual fees to consolidate. You can consolidate one loan or many loans. Basically it is going to combine all your loans, fix your interest rate and stretch your payments out over a longer period of time therefor reducing your monthly payment amount.

   Interest rates are pretty high right now and can’t go much higher (Stafford loans have a maximum interest rate of 8.25%) so unless you are having trouble making your payments and can’t do a deferment or forbearance it is not a good idea. If you consolidate then when interest rates go back down (they are expected to in the next few years) then you are still going to be stuck at the higher rate and can never get it lowered.

   When you consolidate it stretches it out over a longer period of time, which may help a bit if you are having trouble making the full payments, but you also pay significantly more during the life of the loan. i.e. On a $40,000 loan with a 7.14% interest rate you are going to pay about $16,000 in interest costs, bringing you total repayment amount to $56,000. With a consolidated loan you would take 25 years to pay it off and would end up paying $46,000 in interest for a total of $86,000. You are paying back more than double what you borrowed.

   Just don’t go rushing into it. Especially if you are thinking about it just because a company contacted you. Usually they contact you because you are on their mailing list or something. Do LOTS of research, and good luck in whatever you choose!

   Just wanted to add, typically the same types of deferments are available so if you ever go back to school or are experiencing economic hardship then that is not a problem with these loans.

2. ruth4526

   Loan consolidation is to put 2 or more loans in to one. If some times lowers your payments. When you do this you should ask what the payments and interest would be and if it is low. Ask to have it locked in. This way they can not raise your interest or payments. Unless you recommend it yourself. There is no cost of doing this. It would be helpful if you have more than one loan and you are having a hard time making payments on it.

3. mountain gal

   That’s where you add together, a lot of small bills
   with small payments and transfer them all to ONE
   BIG BILL WITH ONE HORRENDOUS PAYMENT!
   Usually they try to give you some extra cash for
   whatever (along with the new loan). And of course,
   the interest payments are increased to the MAX.

4. John S

   Be careful,

   If you consolodate your loans with a private company you may not get the defferment and then you’ll have to start paying the loans while you’re still in school.

   Stick with Sallie Mae if you can while you’re still in school don’t consolodate until you’re out of school at least 3 months.

   I went back to school after consolodating and now I have to start paying on the loans. If I would have kept with Sallie Mae, I could have put the loans back into defferment! Now I’m stuck and I have to pay while I’m in school.

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