Should I Consolidate My Student Loans?

I received a couple of questions about student loan debt and student loan consolidation.

I’ll try to provide some information to help answer these questions, but as usual I welcome your suggestions in the comments. Here’s the first question:

What is the best way to manage all of your student loans once you have finished and would you suggest a consolidation or would that ruin my credit?

The best way to manage your student loans after graduation is to pay them off as soon as you can. Take note of every loan you have. Pull your credit report to make sure you’ve accounted for all of them. Keep meticulous records of what you owe, who you owe it to, and evidence that you are paying.

I used to be in the “keep your student loan debt forever” camp, but we ultimately decided to pay off our student loan debt early. Student loan debt can’t be forgiven in bankruptcy like other debts. It’s never going away. So pay it off as soon as you can.

As for the consolidation, as long as you are referring to a federal student loan consolidation (provided by the Department of Education), then you should not have anything to worry about. Gerri Detweiler, consumer advocate, reinforces this by noting that you are essentially trading installment debt for other installment debt, and your total debt load isn’t increasing.

To consolidate, either go to that website or talk directly with your current lender about a consolidation solution. Don’t pay anyone to do it for you (i.e. origination fees). Also, watch out for pre-payment penalties. Don’t sign up for a new loan unless you’ve read, understood, and agreed to the terms. Have a family member review it with you.

Lastly, be sure to review the many loan forgiveness programs available (i.e. for teachers) as well as the federal “Pay As You Earn” income-based repayment plan.

Alright, now for question two:

I have some credit card debt and student loan debts. Should I work toward paying off my student loans early to get them out of the way? Is it good to consolidate several different student loans?

In most cases credit card debt should take priority over student loan debt. But there are some rare instances where it wouldn’t, so weigh the factors: interest rates, total balance, personal factors, etc.

Yes, you should definitely try to pay off your student loan debt early. There are tax breaks and the increased career marketability that come with having student loans, leading to the thought that it is a “good” debt. But I’ve come to believe that it’s best to try to get rid of all debt as soon as possible. Just kill it off.

Again, as for consolidation, as long as you are referring to federal student loan consolidation then you are okay. In most cases student loan consolidation will not result in a lower interest rate. But it will give you only one loan, one bill, and one payment to worry about. Which, makes life a lot easier and probably decreases the likelihood that you’ll miss a payment.

Some people still disagree, but the general consensus is that student loan debt should be consolidated to simplify your life.

Did you consolidate your loans after college? Can you share your experience? Was it a good move for you?

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About Philip Taylor, CPA

Philip Taylor, aka "PT", is a CPA, blogger, podcaster, husband, and father of three. PT is also the founder and CEO of the personal finance industry conference and trade show, FinCon. He created this website back in 2007 to share his advice on money, hold himself accountable (while paying off over $75k in debt), and to meet others passionate about moving toward financial independence. He uses Personal Capital to track his wealth. All the content on this blog is original and created or edited by PT.


  1. I had about $15k in 2004 that I consolidated to get an interest rate break. At the time the loans were at about 4%, and the consolidation took them down under 3%. I consolidated them with a bank that would give me a few more interest breaks after so many consecutive payments. By 2007, the rate was under 2%. I ended up just paying off the 10K balance in 2008. I’ve seen the interest rates for student loans skyrocket up to 6-8% now. That’s really sad for the next generation of students.

  2. I consolidated mine a while back.  I think I pay $75 a month on a remaining balance of like $2,700.  i graduated back in 1996! I don’t ever really think about these loans until tax time comes around and I check for interest paid.  I always tell myself I should pay it off and be done with it, but I can’t get myself to write a check for $2,700 for a loan I never think about because the $75 is automatically withdrawn from the bank monthly.  I’d rather invest my extra cash.  I’m not sure if it’s the best thing to do but it makes me feel better.  Maybe next year.