Is Consolidation A Smart Move?
Jason in Missouri has $32,000 in student loan debt and is trying to decide if he should consolidate his six government loans into one.
QUESTION: Jason in Missouri has $32,000 in student loan debt and is trying to decide if he should consolidate his six government loans into one. Dave tells him the measuring stick that he should use to calculate if it’s a smart money move.
ANSWER: You get to consolidate one time. After that, you’re stuck. You want to make sure that the net interest rate is lower than your net interest rate is now. Make sure you get a fixed rate on your interest. If you can lock in a lower interest rate than you have now, do it. Student loans are the only thing I recommend consolidating. That’s because it isn’t an ongoing debt unless you’re addicted to going to class.
You still need to pay the debts off early even though you’ve consolidated them. If you consolidate, that will likely take your student loans off of deferment.