4 Tips On How To Consolidate Student Loan Debt
Are you wondering if its possible to consolidate student loan debt? You may not be aware but, student loan debt plagues more than 40 million Americans. In addition, nearly 70% of students who earn a bachelor’s degree graduate with debt. In fact, with over $1.2 trillion in outstanding student loans, students are doing everything to reduce their exposure.
Are you ready to lower your student loan debt? These four tips on how to consolidate student loan debt can help provide the financial relief you’re looking for:
Apply for Federal Student Loan Debt Consolidation
Federal Student Loan Debt Consolidation can turn multiple federal student loans into one. As the name implies, this option is only available for federal students loans.
One of the biggest downsides of this type of consolidation is that you probably won’t get a lower interest rate. Rather, the benefit is that you have a single monthly payment rather than multiple ones. This arrangement can be significantly easier on your finances.
You may also be able to switch from a variable rate to a fixed rate. This could potentially save you money over time.
To get started, visit the Department of Education website and apply for consolidation.
Use a Loan to Pay Off Loans
A private loan consolidation, also known as student loan refinancing, requires you to apply for a new student loan and use the funds to pay off existing student loans.
For many students, this option usually means a lower monthly payment. The terms of the new loan depends upon the borrower’s creditworthiness. If you’ve built up good credit, you may be able to acquire a more attractive interest rate.
You can use this type of loan for both private or federal student loans. If you currently have a variable interest rate, this may be your best chance at switching to a fixed rate.
There’s a Downside to Extending Your Loan Repayment Term
Extending your repayment terms can lead to lower payments. However, keep in mind that regardless of how much you’re paying, eventually you will need to repay the full amount.
The longer you extend your terms, the more you’ll be paying interest over time.
It sounds attractive to lower your monthly payments, but it’s important to understand this option also has a price. So, make sure to do the math to make sure you can live with the amount you’re really paying.
Only Use Trusted Lending Institutions
Student loan debt is a hot topic today, with millions of students and their families struggling with the cost. This desperation has led to nefarious lenders and shady websites to offering student debt relief.
As tempting as it might sound to lessen your debt, be wary of offers that promise to lower your payments. Not knowing the credibility of these companies, they may charge fees that won’t save you any money.
Rather, apply for loan consolidation through a trusted lender. It usually doesn’t cost anything to refinance your student loans, unlike mortgages, to give you the maximum benefits.
If student loans are killing your finances, take comfort in knowing there is something you can do to lessen it. For more information on taking control of your financial future, spend more time on our blog.
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