Consolidating outstanding student loans may offer several advantages:
* It may be simpler to track and pay one bill, if you have multiple loans outstanding.
* The posted rate (now 7.25 percent) on consolidated loans may be misleading. Many lenders offer various incentives that effectively lower that rate. If you agree to have monthly payments made directly from a bank account and if you keep up those timely payments for a few years, you might wind up paying 6 percent or less on your consolidated loan.
* Consolidating student debt changes your loans from variable to fixed rates. You can plan without worrying about future increases.
* You also can extend the repayment period. Federal student loans usually have 10-year repayment terms but consolidating loans can stretch repayment to as long as 30 years. Extending repayment can reduce monthly payments and lower monthly obligations may make it easier to get a home mortgage.
* Federal student loans can be prepaid with no penalty. Even if you extend the term, you can pay down your loan balance as your income increases.
