Consolidating loans pros and cons
Loans that can be consolidated include direct subsidized and unsubsidized loans, subsidized and unsubsidized Stafford loans, direct PLUS loans, SLS loans, Federal Perkins loans and Health Education Assistance loans, among others.Private education loans are not eligible for consolidation.If you fall behind, the mortgage holder can foreclose on your house to satisfy the loan.Unsecured loans are based only on your promise to pay and are not secured by any property that can be foreclosed or repossessed to pay the loan. Unsecured loans usually have a higher interest rate because they carry more risk for the lender.
Once you’ve chosen a debt consolidation method, it’s a good idea to keep the total cost as low as possible.
Chances are if you’re dealing with student loan debt, you’re not just dealing with one loan. And if you couldn’t cover the costs with federal loans, you very well may have turned to a private lender, such as a bank or other lending institution (e.g., Sallie Mae) to fund the rest of your expenses.
One option you have when you begin tackling your student loan debt is to explore loan consolidation.
When you take out a secured loan, such as a mortgage or a car loan, you pledge certain property, such as your home or your car, to secure the repayment of the loan.
For example, when you obtain a mortgage loan, your house is security for repayment.