Student Loan Consolidation - The Implications
Student loan consolidation is a great way to save money and lock in a low interest rate for the life of the loan, but there are implications to consider as well.
For example, if you are married and both you and your spouse decide to consolidate both of your student loans together to make one monthly payment, yes, you can save money. However, should your spouse pass away, you will be responsible for paying off their loan as well as yours. Consolidate separately, however, and if your spouse dies, their student loan dies with them. Divorce, too, leaves at least one of you responsible for the entire loan.
If you have consolidated loans in the past, you may or may not be able to do so again. It depends on the institution. If you have new loans to add to your currently consolidated collection of loans or if you have loans with multiple lenders, then it shouldn't be a problem.
Credit card loans, car loans, home loans – none of these can be consolidated with your student loans. Most student loans are federal and credit card, car, and home loans are all private. Because federal student loans are backed by the government, lenders can offer low interest rates because they know that, no matter what, they will get their money back. Private loans don't have this guarantee and so can't be combined. However, consolidating your loans may raise your credit score and make you a better risk, allowing you to benefit in your private financial matters by qualifying for lower interest rates.
No matter how you look at, student loan consolidation is always a good idea: save money, build your credit, and combine your payments. It's win-win-win!