$39,400, on average. What’s that, you ask? That’s the average amount of student debt that a student can have looming over them after graduation from college. Unfortunately, student loans and the debt that comes with them is commonplace for today’s student. It’s also common to have obtained student loans from various institutions. Do you have several loan payments to remember to make each month? Do you ever forget to pay them; therefore, risking damage to your credit score? Do they all have different due dates? With various interest rates? Are your many payments all going to different institutions? If so, you’re not alone!
Consolidating loans is an excellent way to wrap all your loan debts into one package. Direct Consolidation Loans may also lower your current loan payments but take longer to pay off, sometimes up to 30 years, instead of the traditional ten years. Also, consolidating means you’ll end up paying more in interest over time; however, if you are barely beginning your career, this option will allow you time to get on your feet without an exorbitant payment each month. Also, if in the past you have experienced fluctuating interest rates making your payments unpredictable, a Direct Consolidation Loan will allow you to obtain and secure a fixed interest rate. But remember, combining your debts into one loan means you are locked into paying that back in its entirety since it has now taken the place of your previous loan commitments.
To be able to consolidate your loans, you’ll need to be attending school as just a part-time student, have graduated from school or left school entirely. Most federal loans can be consolidated, but if you have private loans, you must meet specific requirements if you’re in danger of defaulting on your loan. Once your debt is combined, you can start making new payments in a couple of months or sooner.
If you have a private loan, for example through a bank, credit union, or other financial institution, refinancing may be the better choice for you primarily because private loans are not eligible for consolidation. Refinancing can generally afford you a lower interest rate than a direct consolidation loan, and you can pay off your debt quicker when refinancing. However, you must have good credit to be approved for a refinance.
Many financing companies can efficiently assist you in finding the right option for you; however, be aware of refinancing and consolidation scams. Scammers are eager to charge you unnecessary fees, so, before you sign on the dotted line, research several reputable lending companies, check consumer reviews, and consider their presentations carefully to be sure they are viable and reasonable offers.
Don’t let student loan debt discourage you from obtaining the education you deserve. As most careers require a college education, (at least a minimum degree), you can easily find the help you need. Just be smart about it! Be sure to check into other helpful options to see if you qualify before making a consolidation or refinance commitment, such as an Income-Driven Repayment (IDR) plan, the Public Service Loan Forgiveness (PSLF) option or perhaps the Military College Loan Repayment Program (MCLRP). To learn more about student loan forgiveness, click the link to find our Guide To Student Loan Forgiveness.
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