Consolidate Student Loan Debt – We have student loans. In fact, there are another 44.5 million people in the US who are in the same boat; and collectively we are $1.5 trillion in debt. Six months after graduating from college gives us time to think about how we’re going to pay back the money we’ve borrowed. So, we look at our student loan accounts and jaws drop.
Most of us who have student loans have small loans from different employers. There might be a $1,000 loan here and a $2,500 loan there. Then there are the various loans that are added each semester. Some of us may have personal loans in addition to student loans. This means we have to make more payments each month.
Consolidate Student Loan Debt
In addition, each loan has its own interest rates, payment terms and minimum payment amounts. Figuring out all those loans and making sure you pay them back on time can be… scary. What can we do about it?
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One option that can ease the pain associated with student loan repayment is consolidating our loans. We can apply for loan consolidation through Federal Student Aid, which guides borrowers through the process for free. However, before we start debt consolidation, we need to understand its pros and cons. Here’s what you need to know before you decide if this option is right for you.
The choice to consolidate or not to consolidate student loans depends on individual circumstances and goals. Before making a decision, research and review the qualifications and terms of the available options. Talking to a student loan counselor can also help. For many, loan consolidation helps them manage their current finances and pay off their student loans in one affordable monthly payment.
Want to learn more about student loan forgiveness and student loan consolidation? Contact Marshall, your student loan coach, at marshall@.co. It’s the day you’ve been waiting for. You cross the stage, cap and gown in place, your family beaming with pride at the audience. Someone hands you the diploma you worked so hard for, and there’s applause and celebration.
But then a new page arrives, perhaps before you can finish your thesis. Only this time there will definitely be no applause or celebration. Yes of course. It’s your student loan call and someone wants their money back.
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If your college dream turned into a nightmare after graduation, you’re not alone. The latest data shows that student loan debt is just over $1.7 trillion.1 Yes, it is.
While there is no get-out-of-debt card to eliminating student loans, student loan consolidation can be a way to get at least one monkey off your back. But is it the right choice for you and your situation? Let’s go into the details and see.
The purpose of student loan consolidation is simple: consolidate all of your student loan payments into one payment. Ideally, this will give you a lower interest rate and a shorter term.
Technically speaking, the only student loans that can be “consolidated” are student loans. Everything else—whether private and federal or private—must be reformed. We’ll get to that in a minute.
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Dave Ramsey gives advice – but on a case-by-case basis. It’s not good for everyone. (If consolidation isn’t for you, there are many other types of student loan help.)
Whatever happens with student loan support, we’ll let you know! Whether the relief increases or ends, we’ll tell you what the next steps are in paying off your student loans.
You will most likely get one shot at student loan debt consolidation, so you need to keep all your ducks in a row. Before proceeding with the process, make sure you are familiar with the size of your loan and the interest rates and terms. Private student loans can’t be consolidated, and we’ll cover that below.
In some cases, you may be able to consolidate your federal loans. But it’s usually not a good situation when it happens. This would mean that one or more of the following are true: you have new loans that were not in the original batch, you are not paying a Federal Family Education Loan (FFEL), or you have signed up for community service. loan forgiveness program. This is bad, very bad and no thanks.
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Sure, loan forgiveness sounds great. But when you think about what it takes and how few people end up getting their loans forgiven, you’re better off skipping the pain in the neck.
A word to the wise, if you have a graduate or other degree in mind, don’t take out a loan to pursue it! Not only is it a bad idea to go into debt, but if you do, don’t count on being able to wrap that loan through your merger.
The advantage of federal loan consolidation is that you have two or more loans for one. You can also take any number of variable interest rates and convert them into one fixed rate. And it can make life—and the budget—much easier. But don’t count on a student loan association to give you your ticket to low-interest rate victory. With student loan consolidation, it often happens that yes, you get a lower monthly payment, but this is because you have extended the term of the loan. You pay less each month, but over a longer period of time, so you don’t have to save money.
Before approaching your local bank (or looking for loan consolidation companies), you need to know what type of loan you have and whether it’s eligible for consolidation. Spoiler alert: The government can only consolidate your federal loans for free. This means that personal loans are not allowed.
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If you have a small amount of student loans, you may qualify for student loan consolidation
Courtesy of the US Department of Education. A Federal Direct Loan allows you to consolidate all of your federal loans into one payment with a new fixed interest rate (based on your current average interest rate and rounded to the nearest eighth of one percent).3
The advantage of a fixed income loan is a fixed interest rate. With a fixed price, you can block those monthly payments from your budget and start attacking them with a vengeance.
But please note: there is no cap on the bond direct loan interest rate. So if you’re paying high interest on your mortgage now, you’ll still be paying high interest after consolidation. And getting a lower monthly payment can mean you pay off your loan over a longer period of time – up to 30 years. Talk about a nightmare.
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If you have a personal loan, you cannot combine it with a private equity loan. However, some lenders or banks allow you to combine your personal loans into a single amount at a single interest rate. Since your interest rate is often determined by your credit score, a lower score could mean you’re in trouble. Not only that, but their interest rates are usually higher than your direct loan consolidation. Oops, twice.
However, there is a silver lining. If you take out a variable rate loan, talk to your lender about consolidating your loans into one fixed rate.
If you’re like many graduate students, you likely have private and federal loans. If so, you may have discovered how difficult it is to consolidate these types of loans into one happily united family. If you want a private loan or a combination of private and private loans, you must go through a process called a private lender.
. Student loan consolidation and student loan financing are two completely different things. Compounding takes a weighted average of the interest rates on your loans and combines them into one.
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With a refinance, you take out your personal loan (or both private and personal loans) and basically start over. For this you need a private lender or company.
So if your interest rates and payment terms are killing you, refinancing your student loans may be a good option for you. If you find a lender, they will repay your current loan and become your new lender. The goal is to decide on the best interest rate and repayment terms.
Remember: Don’t get so desperate for a low monthly payment that you sign up for a long payment term or high interest rate. You will pay more in the long run. Who wants to do that?
Agree to a variable interest rate. Why? Because interest rates change based on market prices. There is no guarantee that the low interest rate locked in for the first payments will not increase within six months. Do yourself a favor and drive on
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