Pros and Cons of Consolidating Medical School Loan Debts
Michalis 'BIG Mike' Kotzakolios

People say that a mortgage is the largest debt that a person will have in their lifetime. For medical students, a medical school loan can often exceed a mortgage. Medical school loan consolidation is a viable way to save money and time. With only one payment as opposed to many, you minimize the chances of default and late payments. As well, in most cases the medical school loan payment is then lower than the sum of all your student loans combined.

When consolidating medical school loans, keep in mind that this does not equal elimination of your loans. In other words, just because you’ve consolidated doesn’t mean that your debt will go away immediately. On the contrary, in many cases your medical school loan consolidation might actually increase the term of your debt. For example, you might have three medical school loans with terms of 6 years, 10 years, and 12 years. If you re-finance these three medical school loans into one, the term of the new medical school loan can be up to 30 years. Although your payment will be lower, you will pay more interest over the life of the medical school loan than if you did not consolidate to begin with.

You can help mitigate this phenomenon by paying extra on the principal of the loan. As your income increases, you can increase your monthly contributions to your student loan. This will reduce the principal you have to pay, thereby decreasing the term of the loan. If you utilize this strategy, be sure to include a note with your payment that stipulates that the extra payment is to be allocated towards the principal. Otherwise, the lender might apply it to the interest and you’re no better off.

Regardless, consolidation of medical school loans is a good option, especially if you’re still in school or in your grace period. It is during these times that lenders will offer the lowest rates. The lower monthly payment that a consolidated medical school loan offers can bring a lot of relief to cash-strapped borrowers. What’s more, lenders offer more than one repayment option. One option bases your payment on your income and debt level. If you’re not making a lot of money straight out of school, you can take advantage of an income-based repayment plan to keep your payments low until you can afford to pay more when your income starts to rise.
Be careful if you have a mix of federal and private student loans. Some programs do not allow the consolidation of these two types of loans into one. Other programs will allow it, but it is not always advisable to do. You will lose a lot of the advantages of federal student loans when you consolidate them with private loans. For example, if you find yourself in financial distress, you cannot re-schedule your payments.

BIG Mike is a well known author, developer and Adsense expert as well as the owner of Niche Maniacs - a unique Adsense Marketing System designed to build long-term passive income streams from Adsense, YPN, Chitika and other PPC services.