Student loans make it possible for millions of people to attend college every year. By the time it’s all said and done, Florida residents may have several loans with various interest rates to pay back. This is an expensive proposition for the majority of borrowers. I often help clients deal with their federal student loans through the process of consolidation.

Although rolling multiple small loans into a single one can help make payments manageable, it may not be right for everyone. There are pros and cons to student loan consolidations.

Consolidation Pros

If you have more than one loan, chances are you have multiple monthly payments. When you combine loans totaling more than $10,000, you’ll only have one installment amount, with a single interest rate.

Depending on the amount you need to repay, you may have more time to pay off the debt. For example, if you owe between $10,000 and 19,999, you have 15 years to repay it. However, if the total debt is between $40,000 and $59,000, the term length moves to 25 years. The longer repayment term typically means you’ll pay less each month.

If you’re having difficulty making payments, especially on parent PLUS loans, consolidating into a single federal direct loan makes you eligible for an income-contingent repayment plan. It caps payments at 20% of the amount of fixed monthly payments or your discretionary income, whichever is lower. This is the only income-driven option for borrowers who have parent loans.

When you first take out the loans, you are assigned a servicer. You can pick from nine servicers when you consolidate. While this may not matter to some people, if you are dissatisfied with the one you were assigned, now is the perfect time for a change.

Consolidation Cons

Even though the upside to Florida student loan consolidation is significant, it may not fit your needs. While this process is a strategic move that helps you manage your debt, you’ll pay more in interest over the new loan term. The interest rate is a weighted average of all of the loans, rounded up to the next 1/8 percentage point.

At this point, you may be asking, “Is consolidating my student loans the right move for me?”

Before You Consolidate Your Florida Student Loans

Find out exactly how much you owe and how much interest you pay for each loan. Then, look at how long it will take you to pay them off at the current rate and compare it with the weighted average and term of the consolidated loans.

One of the primary reasons people consolidate their federal loans is access to loan benefits such as deferment, forgiveness and forbearance options. These may be beneficial if you lose your job or have other hardships that make your financial situation unstable. However, if this is your reason for consolidation, there are other options I should explain to you.

I help people throughout Seminole and Orange counties with their student loan debt and bankruptcy options. If you struggle to make payments and aren’t making headway, contact me or call 407-749-0080 to schedule a consultation. My office is conveniently located and easy to reach from Orlando, Altamonte Springs, and Casselberry.