Student Loan Debt Consolidation

If you are or have been a college student and borrowed money to pay for education, you obviously need to repay any outstanding loans. It doesn’t matter how long ago the loan was taken out; finishing college doesn’t let any of us off the hook (thought that would be nice).

Many people find that when seeking the purchase of a home or establishment of a family, their student loans come back to haunt them. These college debts should be repaid as quickly as possible to help in moving on with your life. Typically the interest payment on such loans are relatively low compared with just about any other debt. Nevertheless, repayment of a loan of almost any size can be a significant financial burden to anyone just getting started in the working world.

There is one way around this; you can consolidate your student loans and make one payment each month.

By doing this, you actually reduce the amount of time and money used in paying off your various student loans. You can breathe a bit easier knowing that the one payment you make is going toward all those debts, and that they are being paid on time. And if your interest is at a fixed rate, you won’t need to be concerned about it rising over time.

There are four broad types of student loans:

* Standard repayment plan – this is a plan extending over the course of ten years which has one interest rate.

* Extended repayment plan – this is spread over twelve to thirty years. One drawback of this option is that you could wind up paying back much more over the time.

* Graduated repayment plan – this is also spread over twelve to thirty years, but your payments rise every twenty four months. Very risky.

* Income contingent repayment plan – this option takes into account your circumstances and can last up to twenty five years. If you have a family and other commitments, you will pay less overall each month.

Before you jump into any consolidation of your loans, you need to think carefully about pros and cons, asking yourself some key questions.

* Have I already paid anything back? If so you might be worse off after consolidating since you have already begun making payments.

* Do I want to enter a loan agreement for so many years? If this does not appeal to you don’t do it. With that length of time, it will feel like you’re paying off a house.

* Do I earn enough to pay back your college debts without a consolidation agreement? If you do, start doing so.

It is tempting to begin enjoying the benefits of a new career while neglecting the priority of debt repayment. You will be grateful in the long term once you have paid off your loans and have them off your back. Plus you will ultimately save yourself a lot of money after the start of employment by working out a feasible, persistent payment plan that can eliminate all college debts in a relatively short period of time.