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Brooks Wilson's Economics Blog: Student Loan Debt Consolidation

Monday, December 13, 2010

Student Loan Debt Consolidation

Following is a guest post by Emily Jones who can be contacted at debt consolidation.

Should students focus on debt consolidation to beat their credit hangover?

If you’re like any other American who is drowning in student loan and credit card debt, you need not fret. You just found the right site with the right information that can serve as a guide to eliminate all your debt problems. As the economic crisis continues to start forcing people to come across dire financial straits, a huge number of students are struggling to meet their financial obligations. The average college graduates in the US have bore $24,000 in student loan debt in the year 2009. But 2010 has turned USA into a debt-wracked place and there are some students who even carry a larger amount on their educational loan debts.

With the rise in the student loan defaults in the US and the rise in the unemployment rate, an increasingly large number of students are finding it tough to get through jobs. If you’re looking for ways to save money on your already existing debt, you require seeking help of debt consolidation strategies. But before taking the plunge, you need to know how it works. Read on to educate yourself on the details of debt consolidation and the reasons why it is considered as the most successful way of dealing with debts.

How does the Federal debt consolidation process work?

The US Department of Education is well-versed and experienced in the field of consolidating unpaid educational loan bills into a single and affordable monthly payment. Students are more vulnerable to facing financial crisis as most of them use their credit cards impulsively while shopping. With the rising educational costs in the US, there have been lots of students and parents who have financed their educational courses with the help of legal help from the US federal government. If you seek the help of federal student debt consolidation loan, you can consolidate all your master educational loans into a single loan, thereby reducing your monthly payments.

Are there any factors to be considered while deciding if debt consolidation is right for you?

While you’re taking a financial decision, it should always be a measured and an informed one. Yes, there are some factors that should be considered before deciding whether or not debt consolidation is right for you.

• Can you manage your monthly payments?

This should be the first consideration before consolidating your debts. If you see that you have trouble arranging your monthly payments and that you cannot use your deferment options, you may consider getting your loans consolidated by the Federal direct consolidation loan.

• Are multiple monthly payments stressing you out

If you have taken multiple educational loans and you are finding it difficult to manage the multiple due dates, you can seek help of the direct consolidation loans. This will restrict you to a single lending company.

• What are the interest rates on your loans like?

If the educational loans that you had taken carried variable interest rate, you may want to consolidate it through the Federal student consolidation loans. The interest rate on these loans is same throughout the term of the loan.

• How many payments are left on your educational loans?

If you check that you’re almost done with your payments or one or two more monthly payments may eliminate your debt burden, there’s no point in consolidating your debts. However, if you have lots of payments left, you can certainly look for debt consolidation.

How does a student benefit by consolidating his student loan debts?

A student can soon get back grip on his finances by taking help of the federal debt consolidation loan. This way he can contribute to the US economy in raising the number of students who can keep up with their monthly payments. Have a look at the benefits.

• Various repayment options: The borrowers of this kind of loan are usually students and hence they are bestowed with flexible repayment options. The students can easily choose from a number of repayment options as well as terms. The two most common plans used are Income Based Repayment Plan and Income Contingent Repayment plan. These plans are tailored to meet the needs of the students. They are even allowed to switch from one plan to another whenever they find it necessary.

• Single and affordable monthly payment: As you take the debt consolidation loan from the US Department of Education, you will only be liable to make the payments to the department of education. Thus, you’ll be relieved of the worries of multiple payments to multiple lenders.

• No minimum amount required for consolidating: While you will go for debt consolidation help, most often you will come across lending institutions that will require a minimum amount of accrued debts to qualify for consolidation. But with a Federal loan, there is no such option. With any amount of debt, you can consolidate them.

• Multiple deferment options: There are many student borrowers who have exhausted the deferment options on the educational loans that they had taken from the Federal government. You can easily renew the deferment benefits by consolidating your bills through federal debt consolidation loan.

• Revised monthly payments and interest rates: By taking a consolidation loan from the US Department of Education, you can ease out the stress on your budget by lowering your monthly payments. The minimum monthly payments that are charged by the feds on the consolidation loan are usually less than the combined minimum monthly payments on the government educational loans that a student has taken.

The economic downfall in the US has suddenly boosted the number of student loan borrowers who are finding it difficult to arrange their minimum payments. The USA Funds prevention program has been initiated with the aim of helping these struggling borrowers to avoid defaulting on their educational loans. This program is making them aware of the various repayment plans and how they can be benefited by Federal debt consolidation. They have also invested resources that will counsel the borrowers about the various options of consolidating their educational loan debts.

7 comments:

  1. These are some great traditional student loan repayment tips. But there are also a variety of debt repayment options that are often not discussed. Several non-profit organizations offer grants and repayment assistance programs. Additionally, educational websites, such as UniversityDecisions.com, play host to contests designed to help relieve the burden of student loan debt. UniversityDecisions.com's Success Yearbook contest, for instance, awards recent college grads $10,000 towards repayment of student loans each quarter. Other educational sites offer similar contests.

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  4. I believe that it is so important to have this type of help available to students that have multiple loans out for their education. It is so easy to put off worrying about the amount of the debt that is being mounted up while a students total attention and focus is on their school work. Often times it is easier to take the "I'll worry about it late" attitude. Then, once the student has graduated and has to face the daunting task of repaying their debts, reality hits hard and they find that it is more then they can handle. There is also the unfortunate circumstance of being unable to find a job after graduation or not being offered the type of money that was expected after obtaining a degree. There are so many different situations that a college graduate can find themselves in that would affect their ability to repay their debt. Programs like the one listed above as so very beneficial to those such students.
    Kim Huffman

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