Top Reasons to Consolidate Your Student Loans
You can choose a consolidation repayment plan that best fits your current situation. There are up to seven plans to choose from. Your payment may be as low as $0.00/month and you remain current! Consolidation is a far better solution, for most people, than rehabilitation.
Consolidation vs. Rehabilitation
At the end of a loan rehab program, most people have made no progress on their loan principle. Most, if not ALL of the money they have paid into rehabilitation goes to the collection agency or servicer. Rehabilitation has only one slight advantage over consolidation in that the reporting of how the now consolidated loans appear on the credit bureaus. Consider though: What is better, a current consolidated loan with a payment the borrower can handle OR arriving at the end of a several month rehab program with the same onerous loan payment that got you into the trouble in the first place? Also, usually you've made little, if any, progress on repaying your loan(s). In our opinion, Federal Consolidation has SO MANY ADVANTAGES over rehabilitation that there is simply no contest. (A servicer collecting rehab fees will obviously attempt to refute this.)
Advantages of Consolidation
Delinquent and defaulted loan status on unconsolidated loans and Federal Consolidated loans is eliminated.
Collection calls are stopped. The loans causing these calls have been paid in full. Your new Direct Consolidation is under a proper repayment plan for your situation - one you can handle.
Wage garnishment is stopped. Wage garnishment puts a borrower in an embarrassing situation with an employer – not to mention the impact on a borrower's monthly financial planning.
Income tax refunds are no longer seized. Many count on this mini-windfall after the Holidays. Your new Direct Consolidation loan is current; so there is no reason to seize your Federal Income Tax refund.
Huge late and penalty fees paid to servicers and collection agencies no longer accumulate. Again, those old Federal student loans have been paid in full!
There are no prepayment penalties.
- If your financial situation should worsen, your payment is adjusted downward, all the way to $0.00/mo, AND you still remain CURRENT on your student loan payment. This is the single almost "To Good to Be True" benefit of a Direct Consolidation of which, most people are completely unaware.
Any person wishing to return to school, who was blocked from future Federal Student Aid due to delinquency or default, can after they get their new Direct Consolidation loan, return/finish school. Many people have partially completed degrees due to their life circumstances or need an advanced degree. Now, you can finish and augment your degree, placing yourself in a better life position and can repay your new Direct Consolidation loan. By the way, that loan can be placed into in school deferment while you maintain your in school status.
Your credit score may actually improve. Delinquent and defaulted student loans kill your credit score. These old loans are now history and are reported as consolidated.
You have only one payment to make, on one loan, making it easier to manage.