Consolidating student debt

Lenders have fixed costs to process payments and repayment can spread out over a larger period.However, such consolidation loans have costs: fees, interest, and "points" where one point equals to one percent of the amount borrowed.

Most debt consolidation loans are offered from lending institutions and secured as a second mortgage or home equity line of credit.Take a look at the chart below to compare the benefits of loan rehabilitation versus the benefits of loan consolidation.*NOTE: We previously indicated that loan consolidation would result in removal of the record of default from a borrower’s credit history.However, your credit history will still show late payments that were reported by your loan holder before the loan went into default.If you consolidate a defaulted loan, the record of the default (as well as late payments reported before the loan went into default) will remain in your credit history.