Problems with consolidating student loans
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All products are presented without warranty." Graduating from college comes with the acknowledgment of great achievement — and, if you’re like 70% of graduates, a burden on your back in the form of student loan debt.
If you’re thinking about consolidating your federal student loans through the federal Direct consolidation program, there are potentially many benefits: streamlined repayment (one combined loan, one servicer, one monthly bill); simplified interest (if you are converting variable-rate loans to the fixed, weighted-average interest rate provided by the Direct consolidation program); default resolution if you are including defaulted federal student loans in the consolidation; and conversion to the Direct loan program through which you can access some additional student loan forgiveness and repayment programs.Some of the biggest problems I see involve loans that were either erroneously included or excluded from a consolidation (even though the borrower completed the application correctly).This can lead to problems down the road – including default.One option you have when you begin tackling your student loan debt is to explore student loan debt consolidation.
But before you head down that road, here’s what you should know.But far too often, I see major errors during this process.