Are they any disadvantages to getting a Consolidation Loan?
Yes, there could be. Consolidation significantly increases the total cost of repaying your loans. Because you can have a longer period of time to repay, you’ll make more payments and pay more interest. In fact, consolidation can double total interest expense. So, compare the cost of repaying your unconsolidated loans with the cost of repaying a consolidation loan. Consider whether you lose any borrower benefits if you consolidate, such as interest rebate discounts or principal rebates–these can significantly reduce the cost of repaying your loans. Also you might lose some discharge (cancellation) benefits if you include any Federal Perkins Loans. Once made, consolidation loans can’t be unmade because the loans that were consolidated have been paid off and no longer exist. Take the time to study your consolidation options carefully before you apply and talk to the hold of your loans for more information before you consolidate. (This information was taken from The Student Guide 2004-200
