National Student Loan Data System Reports That Students Should Think Before Consolidating

When it’s time to start paying pack your student loan, it is also time to develop your own repayment strategy. A lot of loan holders think that the best way to tackle their student loan debt is by consolidating their loans. There are definite pros and cons to doing this, but for those that have many payments and if they are from multiple lenders, the consolidation road may be the one to travel down.

There is a hitch here though. Borrowers that have Perkins Loans will want to think very carefully being doing any consolidation.

One major thing to remember here is that Perkins loans have their own forgiveness programs as they are actually federal loans and used most often for students that have significant financial needs. There is a fixed 5% interest rate that is standard on these loans. There are also special options that will allow you to postpone your payments at times. The greatest benefit to a Perkins loan is its exclusive forgiveness program.

Perkins loans are forgiven incrementally, which means that loan holders do not have to wait for years of payments to pass before being able to take advantage of income reduced payments. What this essentially means is that borrowers will be able to lose a bit of their loan debt each year that they are eligible.

Another thing to consider when weighing the consolidation option is that doing so will actually wipe away the benefits of a Perkins loan. In short when loans are consolidated the loan holder is really just borrowing a new loan to pay off the original ones, which will then result in one loan in the end. For normal loans this sounds great, but for Perkins loans not so much. When a loan is consolidated any existing loan benefits are erased and no longer usable. So, you keep the debt, but none of the perks.

The National Student Loan Data System has a lot of great information about federal student loans and some tips for reducing student debt.

Lane, R. (2014, September 17). Why Perkins Loans Borrowers Should Think Twice Before Consolidating. Retrieved September 19, 2014, from

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