Many people who consolidate student loans don’t even why they did it. Many were solicited by email, phone or a postcard in the mail. They are attracted by offers that promise lower monthly payments, and/or lower interest rates.

While lower monthly payments sound like a good idea consider that you will be paying for a longer period of time, eventually costing you more money.

Now, lower interest rates are good, however consider that the lower interest rate is a product of “blending” your existing rates and rounding them UP to the nearest 1/8.

So let’s take a look at when this would be advantageous to you. Let’s say you have a Federal Perkins Loan balance of $2500.00 at 5% fixed, and the rest of your loan balances add up to $28,000.00 at 8.25% variable, by consolidating then that means that you will be consolidating a total debt of $30,500.00 at 6.75% fixed. That’s a 1.5% rate reduction from the 8.25% you are being charged on the $28,000.00.

If your balances were 60-70% lower on the loans carrying 8.25% then it would probably NOT make sense to consolidate to lower your interest rate, as the effect of a lower interest rate would be negligible, and all you would have is a lower interest to brag about, but would effectively have NO benefit to you.

Keep in mind that you should still try to pay the loan at a faster pace than the one you are contracted to when the consolidation is complete. Why? Because even if your lower interest rate is lower that 8.25% for the bulk of the balance you would still end up paying more in interest over the longer period of time. To get a FREE, NO-OBLIGATION Benefits analysis so you can make sure Student Loan Consolidation makes sense for you, click here.