Dave Ramsey is a money-management expert, national radio personality and best-selling author.
Is a student loan consolidation a smart thing to do?
—Melissa via Twitter
Dave Says: Student loans are the only things I’ll tell people to consolidate. They’re a little bit different than ongoing loans and other kinds of credit. Chances are you’re not addicted to going to class, so you probably won’t go out and ring up more student loans after you’ve finished your degree and paid them off.
Rule No. 1 about student loan consolidation is that you get one chance. You can only do it once, so the smart thing would be to do it when interest rates are really low, like right now. Rule No. 2 is get a fixed-rate consolidation. Whatever you do, don’t let them talk you into a variable-rate deal.
The third and final rule is to make sure you get a lower rate than the aggregate of your overall rate. If you have one small student loan at 9 percent, and several big ones at 4 percent, the aggregate may be higher if you accept 5 percent on the consolidation. In other words, the total may be higher. So make sure your overall rate is cheaper across the board!