Student loans can be extremely tricky and students don’t realize the financial burden that a loan may entail until it’s time for them to start paying it back. Add to that the confusion of multiple loans and other credit cards that you have accumulated debt in and you are sure to find yourself drowning in numbers.

Statistics show that an average US student on loan owes approximately $ 24,301. The current national student loan debt has also skyrocketed and reached almost $ 1 trillion.

All that being said and done, all you have to do is understand just how you’re going to pay off that loan in order to ensure financial success in life. The answer may just lie in debt consolidation.

What is Student Loan Consolidation?

Loan Consolidation, especially when it comes to student loans can be a great way of simplifying payments on student loans. Consolidating loans refers to combining all debts that you have into one large loan. The effectiveness of consolidating loans is still under debate and many experts believe that the simplicity is quite often a trade-off for higher interest rates.

What you should consider before student loan consolidation

Consolidating a loan is a big decision and needs to be assessed from every angle before every step is taken. Whether or not a student loan should be consolidated is a decision that differs completely from individual to individual.

Ease of payments

The very first benefit of consolidating student loans would be that you would have taken care of all the little bills that you normally wouldn’t have kept track off and paid off the minimum every month in one swoop.

Repayment term

This is a great benefit for people who are having trouble paying off large amounts for the loan repayment. Loan consolidation would mean that you no longer have to worry about the term. Ultimately, the payable amount will be divided over a longer period of time into smaller pieces which you may be able to manage better.

The Long Term or the Short Term?

If you view the situation in scope of the long term, you will end up paying more than the original amount. In the short term however your monthly payments will have significantly decreased. You need to assess whether the short term benefits or the long term benefits appeal more to you and make your decision based on that assessment.

Loan Perks

Another factor to take into consideration is the perks associated with the loans. Do the individual loans offer you benefits such as a lower interest rate down the line or do you have flexibility in payment options?

Understand what benefits you will be receiving with the consolidated loan and whether they are good enough to encompass the benefit of your original loans.

The ultimate decision of loan consolidation relies on the numbers that you end up with after all these calculations. If you feel that you can manage smaller payments at this time in lieu of a larger payment in the future then consolidation might be the perfect solution for you.

Sources
http://www.asa.org/policy/resources/stats/
http://www.investopedia.com/articles/younginvestors/09/consolidate-student-loans.asp
http://www.usnews.com/education/best-colleges/paying-for-college/articles/2013/10/02/student-loans-what-to-consider-before-consolidating
http://money.usnews.com/money/blogs/my-money/2014/01/24/should-you-consolidate-your-student-loan-debt