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Student Loan Consolidation: Lowering the Cost of Education

Mar 12, 2008
Making it through college is a tremendous accomplishment that any student should be proud of. A degree may make you more valuable on the job market, but your credit probably took a bit of a beating as a result of student loans. Yet, without loans many people would not be able to afford college. Now, that you are out and on your own, what do you do about that mountain of debt? Student loan consolidation programs may help manage your debt with a more affordable payment plan.

How can you benefit from a student loan consolidation program?

A student loan consolidation program combines loan debts and allows the graduate to make one monthly payment instead of several separate payments. In most cases, this reduces monthly debt by up to 50 percent or more. The amount of the total loans and specific consolidation program will dictate your precise savings.

In addition to one payment, it is also possible that you might qualify for a lower interest rate, saving you even more! By consolidating your student loans, you are helping improve your credit score because each of the individual loans that are part of the program will be reported to the credit bureaus as paid in full, leaving you with one loan on the report.

Do defaulted student loans qualify for consolidation?

Not all consolidation programs accept loans that are in default, but there are programs that are designed specifically for that purpose. In order to take advantage of these programs you will most likely be required to join a credit counseling program that will help you to make better financial decisions while rebuilding your credit.

Money management is not something most people want to do, but credit counseling may benefit you, especially when considering defaulted loans that will be paid off. The hassle of harassing mail and phone calls from creditors will be eliminated. This will help you while working with a consolidation counselor to repair your credit history to a positive report.

Students Loans from the Government

Even student loans that were issued by the government (as opposed to a bank) are eligible for federally backed consolidation programs. Most government loans have a lower interest rates and are easier to obtain than conventional loans. That is good news all around.

Consolidating all of your student loans and combining them into one loan will usually qualify the loan for lower interest rates due to financing a larger amount of debt. It will take longer to pay it back, but the benefit is paying less money out of pocket every month. Fresh college graduates may not make big salaries right out of school, and spending money wisely while trying to get a foothold in the job market can make the transition easier and more affordable.
About the Author
Want to know more about loan consolidation? Go and visit www.allaboutloanconsolidation.com for news and information about student loan consolidation, credit card debt consolidation, etc.
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