Before I dig into the topic of debt consolidation loans for college graduates allow me to give you guys the basics of it. Debt consolidation is the process of combining several loans/debts into a lower monthly payment that usually follows with a lower interest rate. College graduates usually have a 6 month grace period after their graduation where the loan payments do not kick in. Once the 6 months are up you are usually required to start paying back all of your student loans. When college graduates are having issues with repaying their student debt then they have the option of obtaining a debt consolidation loan.
Many new readers have been flooding into Studenomics. The best part about this is that many of the readers have been asking me questions. Some of the questions I respond to within seconds. Others require some research. I spent a few hours last night researching tips on debt consolidation loans for college students. The result is the following list of general advice on dealing with a student deb consolidation loan:
Debt consolidation loans will simplify your finances
Student debt consolidation loans are known for making your debt repayment easier. In fact it will also simplify your monthly finances. If you have 3 or more separate student loans then this may be too much paper work for your to deal with. If you consolidate your student loans you will only have to make one monthly payment. You busted your butt for 4 years in college so you deserve some sort of financial buffer as you go through your 20s.
There are issues with consolidating Federal student loans
One interesting piece of information that I learned about student debt consolidation loans is that some Federal loans can not be mixed in and consolidated with certain private loans. You really can’t find out this information until you fill out your application for the debt consolidation loan. Just be warned ahead of time and don’t expect the student debt consolidation loan to be your almighty savior.
Debt consolidation is not ideal for everyone
Smart debt consolidation will allow you have some breathing room while you search for the perfect job. However, if you are making your student debt payments every month without any worry then debt consolidation is not ideal for you. Consolidating student loans is ideal for those that are struggling to make their monthly payments and losing sleep over the issue. If you have a steady income and you are fairly aggressive with your student debt repayment then you should continue on this track instead of consolidating your student loans. Further reading on if you should do a debt consolidation loan.
Consolidating your student loans will lower your payments but…
The debt consolidation loan repayment plan will likely end up costing you more in the long run. According to a Forbes article on debt consolidation loans for college students: you can stretch out an average student loan from 10 years to 20 years & cut monthly payments by 35%. On the flip side it will take you double the time to pay off your student loans. It all depends on your current financial situation. If you can get aggressive with paying off your student loans then please go for it. If you need financial assistance then just be cautious of the added time to your loan repayment schedule.
I promise that I will cover the topic of debt consolidation loans and student loans more often in the future. Just please bare with me while I do more research and learn more about the topic. Please feel free to share your thoughts or shoot me an email if you think I’m a fool or if you more to add to this topic.
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Student loan consolidation can be a real “win” for us alumni who have variable rate federal student loans. The rates are really, really low right now, and I can’t see them getting much lower. A consolidation is pretty much the only way to lock those variable rates into a fixed low rate. Just another reason to make sure you know everything you can able the loans you have, including the interest rate and whether or not its variable!
I graduated with 4 loans at pretty high rates. I consolidated in the early 00’s to a low rate. It saved me a bit over the last 8 years, but I suspect not that much. Wish I’d researched it more back then. I just went for the lower rate. Now they are paid off though, so I’m done with it for good.
@Stephanie Yes it’s true that the interest rates are as low as possible. Definitely something to consider when deciding if a debt consolidation loan is for you.
@PT Money Congrats on getting that out of the way!
You’re right that student loan consolidation is not right for everyone, but everyone should consider it. It’s also important to point out that consolidating federal loans can only be done once – In other words, you can’t keep “reconsolidating” your student loans each year. So make sure you think it through and get the best rates possible before signing on the dotted line.
Student debt consolidation loan means having the multiple student loans replaced with a single loan with a lower monthly payment scheme to be paid over a longer repayment period. Though a student debt consolidation loan is beneficial, it is important to know its pros and cons before signing up for one. The huge students’ loans have an impact on your future decisions and on your credit history.
http://studentsblog2.blogspot.com/2009/10/getting-student-debt-consolidation-loan.html
Student loan consolidation make the easiest way for student to take a decision for studying higher which is beneficial to the student at low rate.