Real Life Debt Solutions With College Loan Consolidation
Most people probably go
through college without ever knowing how expensive their education
is - until they are slapped with the billing notice for the first
payment on their student loan. And then it comes. The dawning of
the real world: they have to get a job to pay the bills. Then comes
another flash sign: college loan consolidation.
There are private student loans and there are
federal student loans. Whatever type of loan or loans you had to
pay for your education, these are loans that you need to repay.
For recently graduated students struggling to find a high paying
job, paying multiple education loans can be overwhelming. It does
not help that defaulting on the payment of their loans can get them
marked as a person with a bad credit history by the credit bureaux,
making it very difficult for them to access additional credit.
A loan consolidation presents a very real chance
for student loan debtors to pay for their college loans. What it
does is to combine all your college loans into one single debt account
and thus, all the payments are paid for through one payment each
There are many college loan consolidation companies
mushrooming on the Internet today, and it pays to compare interest
rates and loan terms. The single monthly payments under college
loan consolidation programs are always lower than the total monthly
payables on unconsolidated loans. This is made possible through
a longer payment term than your typical college loan - from 10 to
With some providers you can reduce your monthly
payments by as much as 53% with a federal student loan consolidation
while for private loan consolidation, interest rates are reduced
if you pay on time or if you pay through an automatic system like
an auto-debit system.
You cannot consolidate federal loans and private
education loans through one loan consolidation program. If you have
outstanding federal educational loans alongside private education
loans, you need put them under separate consolidation loan programs:
federal college consolidation loans and private college consolidation
With some providers of federal college loan consolidation
programs, the terms are more forgiving under certain conditions.
You can actually get some percentage off the interest rate if you
set up an automatic debit system for payment (some providers offer
a .25% reduction in interest rates). On the other hand, you will
not be eligible for a private college loan consolidation if your
debts do not total at least $7,500.
If you do the math properly, you will find
that you will actually end up paying more for your college loan
when you consolidate them, precisely because of the longer payment
term and the interest rates. However, if you do not consolidate
your loans under a college loan consolidation program, you will
have to labor with contacting your creditors and talking to them
one by one for more favorable terms of payment. And you might not
have the necessary negotiating skill to tip some terms in your favor.