Consolidating your student loans is one of the best money management things you can do, but will it REALLY save you money in the long run???
When you consolidate, it helps lower your monthly bill payment. As you guessed, this is a good thing…most of the time. What you might not know is this consolidation adds to your total amount owed. My advise would be, if you can afford your payments just keep chugging along and paying your bill month by month. But keep a watchful eye on the rates. Student loan consolidation rates are changing, so you might want to reconsider student loan consolidation.
On July 1, most of the people who hold federal Grad PLUS, Stafford or Parent PLUS loans will get word from the Department of Education, and their benefits might be coming to an end. For a lot of people, this means the end of their benefits.
The Department of Education started purchasing loans through a 2007 Act called ECASLA (Ensuring Continued Access to Student Loans Act). What happened was, lenders would give discounts to borrowers to get them to consolidate with their company and not someone else’s company.
When ESCASLA came into play, companies who were trying to consolidate borrowers had to stop because the Department of Education wouldn’t purchase the loans if they offered special incentives.
Some people think this is unfair and don’t like this much government intervention. Only time will tell if the government made the right decision.