Student Loan Consolidation Tips and Resources

You’ve graduated from college into the real world with the skills and the degree to get a great new job.

Unfortunately, you’ve also graduated with a lot of debt. Many recent graduates have their debt spread out over a number of lenders. Consolidating those loans can be a good way to handle the situation.

Before you decide if consolidating is right for you, consider these student loan consolidation tips and resources.

Consolidating can be beneficial because it helps to lock in a low interest rate. The current interest rates are pretty low, so consolidating will insure that your interest rates do not increase over the years.

No set of student loan consolidation tips and resources would be doing a proper job without mentioning that consolidating can also increase the cost of the loan overall.

Consolidating creates a new, larger loan with a longer repayment term. This makes the payments smaller, but with interest the overall cost of the loan would increase. If you can afford to pay off the debt within a short period of time, it might be best to not consolidate your student loans.

Any good website, counselor, or friend claiming to offer student loan tips and resources will say this: Do not consolidate your federal loans with your private loans. Federal student loans have special benefits that private loans do not have, such as income based repayment and low interest rates. Consolidating a federal loan with a private loan will result in your losing all benefits of your federal loan. For this reason, it should not be done.

Before deciding whether or not to consolidate your student loans, you should think about what you plan on doing after college. Typically, the payments on a consolidated private loan cannot be deferred while still in school. You can, however, defer payments on a federal loan consolidation.

So consider this if you plan on pursuing an advanced degree.

If you still can’t handle your debt burden, even after consolidation, consider looking into a Student Loan Forgiveness Program. Certain volunteer programs, types of work, typically related to public service, and military service can make you eligible to have all federal student loan debt dismissed. In addition to consolidation, this can help to lessen the student loan debt burden.