Taking Away The Stress: Student Loan Consolidation Can Make It Easier

While there are opportunities for students to consolidate debt through a private student loan consolidation plan, graduates who have federal loans may also take advantage of federal student loan consolidation options which could come at a lower interest rate than some private consolidation plan. Yet, financial aid counselors often point out that not all graduates will benefit from consolidating student loans after they have exited college, and for this reason, careful consideration must be made before entering into a consolidation agreement.

Too Much Borrowing

"Students are having to take out more loans, usually having to max out their federal loans and having to take out private loans in addition to using credit cards," she said. "Once that all comes due, they're often not in a position to afford the payments."

Career Qualifying Forgiveness Plans

Federal student loan consolidation plans or repayment options that allow students to only pay a small percentage of their monthly income towards their student loans each month can work along with this forgiveness option and provide not only more affordability on a month-to-month basis as a student is attempting to erase their debt, but after the 10 year repayment period has been met, these graduates in public service fields can have the remaining balance cleared and they will be student loan debt free. Obviously, these types of forgiveness plans are hoped to draw more individuals into the public service sector, but not all careers may qualify under a Federal student loan forgiveness plan and may require a graduate to contact their lender about qualifications for not only student loan debt forgiveness but other forms of repayment assistance that can help make repayment more affordable.

 

Smart Financial Decision

Consolidating your private student loans can be a smart financial decision that allows you to combine all of your eligible private student loans into a single student loan. In most cases, consolidating your private student loans will extend the repayment period beyond the repayment periods of the private student loans being consolidated. However, your monthly loan payment may be lower than your individual private student loan payments combined. Extending the loan term will likely increase the overall cost of your loan. You can choose to repay principal at any time with no prepayment penalty. Federal student loans are not eligible for private consolidation.