Student consolidation loans also have their drawbacks as far as financial aid is concerned. Here are a few of them:
-You will pay up to thousands more in interest on your student loan, if you extend the loan to 30 years. Yes, your monthly payments will be lower, but in the end this will mean that interest accumulates much more and that this form of financial aid helps you less. Because of this, the sooner you pay off the loan the better (if you are pursuing financial aid, you should be wanting to SAVE money!)
-You will simply have the “burden” of paying off a loan for a longer period of time. Personally, I would like to get any debt off of my back as soon as possible. But then again, a student consolidation loan is good for financial aid in that it will free up your money for any other expenses you may need it for.
-Might lose original repayment incentives for the student loans (e.g. rebates for early repayment)
-Potential loss of deferment options or grace periods that had with original loans
For the most part though, most people usually choose to consolidate their student loans in order to lower their monthly payments. So unless someone has a huge problem with paying extra in the longer run or something like losing a grace period, most of these drawbacks are outweighed by the financial aid benefits of student loan consolidation.
Jan 4, 2009
