Cons of consolidating student loans
Private education loans are not eligible for consolidation, but for some Direct Consolidation Loan repayment plans, the total amount of your education loan debt—including any private education loans—determines how long you have to repay your Direct Consolidation Loan.Direct PLUS Loans received by parents to help pay for a dependent student’s education cannot be consolidated together with federal student loans that the student received.Your loan servicer will let you know when the first payment is due.
Some of these debt consolidation companies are legitimate; according to the Consumer Financial Protection Bureau, however, others are incredibly risky.
If consolidation would cause you to lose the benefits associated with some of your current loans and you are working toward earning those benefits, you should not include those loans in your new Direct Consolidation Loan.
Whom do I contact if I have questions about consolidation?
That’s because some may be debt settlement companies that convince you to stop paying your debts and “instead pay into a special account,” the CFPB warns.
“The company will then use this money to attempt to negotiate with creditors to reduce the amount of principal you pay off.” If you’re considering this option, try to speak with a nonprofit credit counselor first because debt settlement can put your credit in jeopardy.