Student Loan Consolidation will NOT save you money! Unfortunately, most lending companies do not yet offer us programs where we can end up paying back less on our loans.
However, student loan consolidation is still a great financial aid option to consider, as it will make paying back the loan much easier, depending on the repayment plan that you choose.
The way this loan works is that after you combine all of your student loans into one, you can choose repayment plans that extend your repayment term by up to 30 years. Many people choose to consolidate as a result, because it eases the burden of paying for college by a great amount. For example, consider a parent or student that took out $100,000 in loans to pay for a college education. Normally these would have a 10 year repayment term, which would mean you are paying $10,000 per year (not including interest). By consolidating, this parent could increase that term up to 30 years and their yearly payments would only be $3,333 (again, not including interest).
This is why many consider consolidation loans; while it will not save you money and actually costs you more in the end because of interest (the interest will accumulate more over 30 years than it will over 10), parents and students can extend their repayment term to make their yearly/monthly payments extremely manageable. For the example above, instead of paying about $1000 per month, you would only be paying $300 or so per month. That’s much more manageable and forgiving when you consider other living expenses, like insurance, food, rent, gas, etc.
So once again, student loan consolidation will NOT save you money. In fact, you will pay much more in interest. However, your yearly/monthly payments can be a lot lower and spread out over a much longer period of time (depending on the repayment plan you choose), which proves to be a great comfort for money.
Also, no other loan program offers such flexibility in the number of repayment plans available.
