When Is Student Loan Consolidation Necessary
Student loan debt is at an all time high. Currently, about two-thirds of student who are graduating from four-year institutions hold an average debt of $19,200 as reported by The Project on Student Debt. Student loan consolidation is on the rise as our country holds over 1 trillion dollars in student loan debt.
It’s every graduate’s dream to take what they have learned in college and find that “perfect” job that will get them started in their new post-college life. Unfortunately, a reported 53% of recent college grads finding themselves unemployed or under employed. Many are turning to student loan consolidation for financial relief.
Often times we don’t realize what we have gotten ourselves into when it comes to borrow money. It is only until the reality of paying it back that we are faced with the agony of figuring out how our finances can bear the burden. For so many college students who turn to financial aid to see them through their scholarly journey, consolidating students loans allows them to pay their loans without getting behind or risking going into default. Of course for those who are able to make their payments, seeking out student loan help may not be needed. The first step to considering getting help is finding out if student loan consolidation is necessary for your particular financial circumstances.
One the biggest reasons people turn to student loan debt consolidation is to combine multiple loans and have only one monthly payment. it can be confusing making several payments to multiple lenders with varying interest rates. Consolidating all of your loans into one makes it much easier to make your payment every month.
Another reason consolidation is good for graduates is to move from having variable interest rates to a fixed interest rate. Having a fluctuating interest rates means running the risk of having your payment go up as well as incurring a “balloon” payment at the end of your loan because your rates have gone up. With a fixed rate you can rest easy that their will be no changes in your payments for the life of your loan.
Do you need a way out of default? That is definitely a good reason to turn to student loan consolidation for help. Student debt relief service providers will work with your current lenders to transition your loan into one consolidated payment that will then become current. With a lower payment, you will be in a better financial position to make your loan payments every month and avoid going into default status again.
One more very good reason to consider student loan consolidation is if you want to be eligible for the Public Service Loan Forgiveness program.
Student loan consolidation isn’t for everyone but it’s certainly worth exploring if any of the above points apply to you. Be sure you research to understand how consolidation works and what will be required of you during the process.