Each type of loan consolidation should be entered into only with thoughtful consideration, and the guidance of a trusted and seasoned professionals. When borrowers choose to include federal student loans in a consolidation with other outstanding debt they miss out on the many forms of repayment assistance that are generously made available exclusively for their federal student loans.
You will miss out on generous federal student loan repayment assistance, including income based repayment, deferment and forbearance. Borrowers often don’t realize that since they are not dealing with the collection agency or lender directly, they could have negotiated an even better outcome had they had spoken with their lending company directly.
Moreover, working with a debt consolidation company takes away the greater control a borrower could have had over outstanding debt. In fact, when borrowers put a third party in charge of negotiating their debt repayment, they need to beware that this third party might not have their best interest in mind. Some debt consolidation lenders even offer consolidation to those with defaulted student loans. They’ll negotiate a settlement with the lender, and then charge the defaulted borrower for their services.