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By Glen Orenstein

Student loan consolidation is something students are beginning to
consider because of the potential benefits that it can have on a long
term basis. Like with most financial matters, student loan
consolidation isn't all about positives, though. There are quite a few
negatives to consider before pulling the trigger on consolidation. By
considering all of the potential pros and cons, students and their
parents can be sure to make an informed, responsible decision with
their loan.

The pros of student loan consolidation are many. The most glaringly
obvious positive to consolidating your student loans is the fact that
consolidation can lead to reduced payments and interest rates. For
students that have years of loans under their belt, this can be an
important money saver and a way to jumpstart a financial future.
Obviously, the resulting interest rate must be lower for the
consolidation that in the prior loans.

As with most loan consolidations, there is the positive of having the
loan more organized. Though a loan is something that college graduates
should be able to keep up with, it never hurts to have only one
payment instead of having to remember to make three or four different
payments. With student loan consolidation, this is made possible. With
only one payment being due, there's also the hope that your credit
rating could be improved over the course of time.

Though the positives of student loan consolidation certain make it
seem like something that all students should look into, there are also
a few potential negatives for students and their parents to consider.
Student loan consolidation is quite final, meaning that a decision to
consolidate your student loans can not be reversed or changed. Once
the consolidation is agreed upon, the student loans are paid off in
full by the consolidating company and your payment responsibilities
are shifted.

In addition to being final, student loan consolidation can be quite
tricky. In order to gain this consolidation, one must work hard to
find a reputable bank that is willing to lend the money. In addition
to that, there's the problem of finding an acceptable interest rate as
compared to the old rates. Because student loans can be both private
and government funded, borrowers must weigh the risk of taking the
government backing off of their loans.

Student loan consolidation must be done on two different fronts, which
makes it especially troubling. The refinancing of federal student
loans can be done at a very low interest rate and coupled with
government backing, makes for a very easy transaction. Private student
loans must be refinanced and consolidated separately, creating another
hassle. Potential borrowers will find it especially difficult to find
suitors in today's market. Lenders have tightened up their credit
requirements, making it difficult for students to finance such loans
with their lack of credit history.

There are many positives and negatives that come with the school loan
consolidation process. Though it can be a way to stay organized and
lower the payments, student loan consolidation is a little bit of a
risk. Having such a large, unsecured loan in one place can have an ill
impact on a person's credit and can be quite a responsibility for
young adults.

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