Why Shouldn't You Consolidate Your Student Loans The Disadvantages of Merging Your College Debts

College debt consolidation is such an attractive repayment option that a lot of borrowers fall for it. However do you know that there are disadvantages to this that not many are aware of and they only encounter it after their debts are merged?

Before you go ahead and consolidate your student loans, it will help a lot to know the disadvantages of this refinancing action. What disadvantages are these?

1. Your borrower's benefits are forfeit. There are benefits that apply only to individual debts like discounts on interest rates and rebates. Retaining these benefits could be enough to pay off your college debt's low interest rates. You will very likely lose these benefits once your debts are merged.

2. Longer repayment period will increase the original cost of your debts. To accommodate lower monthly payment dues and interest rates, your repayment term will be extended up to 25 years. In the long run, you will end up paying more than the original amount you borrowed because you are paying longer.

3. Merged college debts are subject to pre-payment penalties. This may be true to some debt consolidating companies so you have to take care and not choose these types of plans. There are instances when you can pay your dues earlier than agreed, having to pay a penalty is an extra cost off your budget. You should also be wary of plans with default penalties.

4. Merging private and federal debts together is not an advantage. Private lenders have different consolidation terms from federal lenders. Federal loans have essential borrower's benefits that may be lost if merged with your private debts.

You should also consider your personality before you consolidate your student loans. Do you have the necessary commitment required to eliminate your various debts at once? More than the availability of resources, your ability to cope with the demands of repayment should be considered as well as your dedication to stick with a payment plan after you have chosen one.