Loan Consolidation: Pros, Cons, and Further Resources

Although the best source of information is always your lender, we have gathered information to help you make a little sense of consolidation. Perkins Loans, Stafford Loans (both subsidized and unsubsidized), and PLUS Loans are all available for consolidation. Loans that are not guaranteed by the federal government (i.e. all private loans) are usually NOT eligible for consolidation. Check with your lender.

Pros of Consolidation:

• One payment for all student loans.
• You can choose what loans to consolidate; you do not have to consolidate all of them.
• You can consolidate just one loan.

Cons of Consolidation:

• Possible loss of borrower benefits.
• Extended repayment terms, increased loan costs.
• Possible loss of deferment provisions, cancellation, and forgiveness options.

Other information to consider :

• Consolidated interest rates are figured by the weighted average of all loans being consolidated and rounded to the nearest eighth of a percentage point.
• Consolidating during your grace period can allow you to get a lower interest rate than consolidating during your repayment period, but all your loans enter repayment immediately after consolidation and you lose any remaining grace periods.

Other repayment options:

Income contingent repayment, graduated repayment, and extended repayment all increase the amount of interest paid, but the increase is generally less than with consolidation. You may want to check into these options before consolidating. Some lenders will offer these options with consolidation packages.

Please visit the following websites for further consolidation information:

• WWW.FINAID.ORG/LOANS/CONSOLIDATION.PHTML
• http://www.ed.gov/offices/OSFAP/DCS/consolidation.html
  

**Although this information may help you make a decision about consolidation, the College of William and Mary does not endorse either option, as we are not in the business of consolidating loans.