Why Student Loan Consolidation Is Important

By now, you know that student loan consolidation saves you more money each month by reducing your monthly payment. However, did you know that consolidating saves you additional money by beating inflation and by helping you service other debt?

Inflation

Here's how it works. Inflation is essentially the de-valuing of money. Consider these simple facts:

• A car you bought in 1998 for $20,000 would cost you approximately $22,980 today.
• A college tuition you paid $25,000 today would have only cost $19,508 ten years ago.

The lesson is clear: a dollar in your pocket today is worth more than a dollar in your pocket tomorrow.

That's why consolidating your student loans is so important - student loan consolidation puts more money in your pocket today, now, when it can do more for you. Every monthly payment you make is lower after you consolidate, which lets you put the savings towards other things in life.

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Debt Service

The past year has brought many changes to personal finance, from higher interest rates on student loans to higher rates on mortgages to higher rates... on pretty much everything. That's another reason student loan consolidation is so important - by locking in your rates, you insulate yourself from future rate increases. By lowering your monthly payment, you'll free up valuable cash to help pay down other, higher rate debts like credit cards, too.

The year ahead, according to experts at Bloomberg Financial, will be rife with interest rate increases, so consolidating your student loans now will free up money so that you can get rid of other debts as quickly as possible.

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Prices derived from the Federal Reserve Bank Consumer Price Index Calculator. Give it a try! Prices updated for 2005.