If you’re a recent college graduate, then your mind is probably filled with thoughts of securing employment and finding accommodation. However, it’s vital not to forget arrangements for repaying your student loans. Get in…
Student loan default rates have reached their highest level in 16 years, according to figures from the Department of Education. The figures show that one out of every ten borrowers who started repaying their federal student loans in…
A key problem for college graduates is that they often have several different loans to pay back, including a mixture of federal and private loans. One of the main risks with having lots of separate student loans is that it can be hard to keep track of the various interest rates and repayment dates and amounts. Many college grads find it difficult to juggle these different payments, and this partly explains the high default rate during the first couple of years following graduation.
One way to overcome this problem is by consolidating student loans into one easy-to-manage loan. Student loan consolidation involves combining several loans into one larger loan from a single lender. This larger loan is then used to pay off the balances on the original loans.
Borrowers can consolidate most federal student loans, including: Stafford, PLUS, SLS, FISL, Perkins, Health Professional Student Loans, NSL, HEAL, Guaranteed Student Loans and Direct loans. It’s also possible to get separate private consolidation loans for borrowers who have taken out private education loans.
When a borrower opts to consolidate student loans, they greatly reduce the time and effort required to manage their student loan debts. Instead of making several different repayments each month, they will have just one payment to remember and budget for.
Consolidating student loans makes life much easier at a time when college graduates have several other changes to get to grips with, such as job-seeking and arranging off-campus accommodation. It’s clear to see how student loans consolidation can help to reduce the risk of loan defaults.
It’s important for graduates to work out whether or not the interest rate on the student consolidation loan they’re considering will leave them better off in the long run. Particularly for borrowers who stretch out the life of the loan in order to reduce their monthly repayments, they may end up paying back far more interest overall. However, this can be a worthwhile price to pay if it means achieving more manageable payments and simplifying their finances.
College graduates who are thinking about consolidating student loans - whether that be federal student loan consolidation or private student loan consolidation – should do their sums carefully so they know exactly how much they will end up paying in the long run. It’s also important to know what fees and penalties are involved – it’s a good idea to have a friend or relative read through the terms and conditions to be sure they’re fully informed.