Is Student Loan Consolidation Right For You?

Making it through college is a tremendous accomplishment and you should be proud of yourself. While your degree makes you more valuable on the job market, your credit probably took a bit of a beating by way of student loans - am I right? Sure, without them many people wouldn't have been able to afford college in the first place, but now that you're out and on your own, what do you do about that mountain of debt? Fortunately, there are student loan consolidation programs to help you manage your debt without going broke in the process.

What does a student loan consolidation program do?

Simply put, a student loan consolidation program helps you to consolidate or combine your debt so that you can make one payment every month. In most cases this can reduce your monthly expense by up to 50%, though the amount of your loan and the program you work with will dictate your precise savings.

In addition to one payment, you may qualify for a lower interest rate, thereby, saving you even more! By consolidating your student loans, you improve your credit score because each of the individual loans included in 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. There are other programs designed to address default loans and associated interest rates and payment plans. These programs may require participation in a credit counseling program designed to help you with making better financial decisions while rebuilding credit.

Learning to manage your money isn't something most people want to do, but it will benefit you in the long run, especially considering those defaulted loans that will be paid off and the hassle of constant mail and harassing phone calls will be eliminated while you and your consolidation counselor work together to repair your credit.

Federal Student Loan Consolidations

Student loans that were issued by the government (as opposed to a bank) qualify for federally backed consolidation programs. Most of these government loans have a lower interest rates and as well as 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. The life of the loan may be extended (meaning that it will take longer to pay it back), but the benefit is paying less money out of pocket every month. New college graduates may not make the greatest salaries right out of school, and spending less money while trying to get a foothold in the job market can make the transition easier and more affordable.

About the Author

Interested in information about debt consolidation? Go and visit www.allaboutdebtconsolidation.com for news and information about student debt consolidation, credit card debt consolidation, etc.

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