Student Loan Debt – Loan Consolidation Sticker Shock
If you are someone seeking a degree or helping someone in the process, you’ve probably already experienced the sticker shock associated with the cost of attendance, housing, books and food. For many, the only option becomes going into student loan debt. There are a few lucky ones who will be able to pay for their schooling with scholarships, but such luck is rare. The most recent research suggests that two thirds of all students will graduate owing money to their creditors. Fortunately, this debt does not have to be overwhelming, if you choose options that are right for you.
The critical factor of taking out loans for student expenses is to make sure you don’t take out more than you really need. If it’s a possibility for you, working part-time to pay for books and food can help you not only avoid unnecessary debt, but amp your grades. Statistics reveal that individuals who work 10-12 hours a week actually tend to get better grades, as they manage their time a little better out of necessity. However, working more than 12 hours can actually hurt your grades, so maintaining a balance is key. If working 12 hours a week isn’t quite covering your necessary expenses, further student loans may be required.
Student Loan Debt 101
The federal Stafford loan program is one option that is highly beneficial, as it will cover your tuition without breaking the bank with interest. Typically, you will be left with $15,000 to $20,000 once you are handed your diploma. As soon as that diploma is in the frame, you’ll be expected to start paying it off, though how long the government gives you to get the diploma framed will depend on what kind of loan you took out to begin with.
It is critical to keep track of all of your paperwork regarding student loans. While we don’t really like to think about how much debt we’re in when hitting the books, once it’s time for us to get a real job, we’ll need that information to set up financial goals for the future- including paying off those loans. Having the paperwork will only grease the skids on the process, and make it far simpler for you to become the adult you want to be.
Student Loan Debt Consolidation after Graduation
On the day of your college graduation, as you pose for a million photographs in a billowing gown and hat that don’t really flatter anyone, your mind will be clouded with dreams of a bright and exciting future. Once the dust begins to settle, those dreams will seem exciting and possible, but not quite as within reach as you once thought. Those student loans that purchased the degree you hold in your hand now need to be repaid. However, it’s unlikely that this will be the only debt you have. You may also have credit card or car payments to be made. This may be difficult to fathom, let alone afford. However, student loan debt consolidation can make the way far less complex.
While the term may sound appealing, understanding what it means is a whole other issue. Basically, what student loan debt consolidation does is pay off all of your loans from the various institutions they stem from, and allow you to pay the institution helping you with one, simple, monthly payment at a lower interest rate than you’d pay on a multitude of loans.
How Student Loan Debt Consolidation Works
The company who extends you a debt consolidation loan that covers all of the money you owe to various lenders from student loans in college, and will pay those individuals the precise amount owed. You never actually see the money, but your creditors will, which is what’s important. At this point, you now owe all of the separated money to one company, and will begin to pay them off with a monthly check. This is so much easier, because instead of remembering to pay multiple bills on different days, you are making one payment at a time.
The consolidation of your student loans will eliminate your prior interest rates and replace them with a new one. This is something you should consider carefully, as sometimes the interest rate offered can be higher than what you’re already paying. There are some student loans out there that have no interest rate attached at all! Trading in one of those loans for one you have to pay interest on is only going to cost you more in the long run, and would thus make you a poor candidate for such an offer.
Another component of interest rates is whether they will be fixed or variable. If they interest rate is fixed, it will not fluctuate over the life of the loan. If it is variable, missing a payment could cause your rate to skyrocket. Considering the risks involved and what exactly you can afford is a crucial step here that you cannot afford to miss!
Student loan debt consolidation is just one option among many. It may be the right one for you, but the best way to find out is to use the research skills you picked up while seeking that fancy diploma and figure it out yourself.
