Student Loan Consolidation

Financing an MBA can be tough, especially if you already have school related debt, or any debt, for that matter. In some cases, student loan consolidation may be a beneficial, or even necessary step to entering an MBA program.

Student loan debt consolidation can have many benefits, the largest of which is lowering your current interest rate and monthly payments, allowing you to redirect money to other pressing expenditures. Furthermore, consolidating debt has the advantage of greatly simplifying your finances by condensing your monthly payments into one payment. This will eliminate the stress of keeping up with multiple payments, and greatly reduce the chance of having interest rates raised due to a late payment.

There are many factors to consider before going ahead with student loan consolidation. First, consider the "return on investment" (ROI) with regards to potential MBA programs. Simply put, will the benefits (knowledge, career opportunity and potential salary) of an MBA program justify putting yourself further in debt. Now, this is not an exact science, as you are dealing with "potential", however, you should be able to generate a fairly clear picture of the risks and rewards. Consider the employment and salary statistics of your program choices; keep in mind you should put the most weight in statistics from MBA programs from which you have a good chance of acceptance. In other words, do not decide to consolidate loans and return to school on the basis of that impressive salary statistic from your "reach for the stars" business school choice. Also, it is important to research your potential job market growth and your perceived abilities within that field.

It is also important to consider the specific benefits of school loan consolidation (MBA benefits aside) on an individual basis. Depending on certain variables, consolidating student debt is not necessarily guaranteed to be highly beneficial. It is important to understand the different implications of federal student loan consolidation versus private student loan consolidation, especially if you are making payments on both loan types.

Federal student loans have many advantages over private loans, such as significantly lower interest rates, longer term lengths, and in some cases, the ability to defer payments upon returning to school. The latter can be especially beneficial when consolidating federal loans. Therefore, it can be harder to consolidate private student loans given their shorter term lengths and general deferment inflexibility. It is important to deal with federal loans and private loans as separate entities- you will lose the inherent benefits of your federal loans if you consolidate them with private loans.

Other factors such as your payment history and current rates will also affect your student loan consolidation interest rate and the overall benefit to you. It is important to seek good counsel when considering this process. Unfortunately, it is hard to pinpoint the best student loan consolidation program as everyone's circumstances differ.

For many, deciding whether or not to consolidate student loans will be an added stress to the MBA admissions process. Staying organized and seeking the proper counsel will always make the process easier and more beneficial to you in the end.

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