The challenges of being a student in college can be overwhelming, but even when the freedom of a degree has been attained, the struggle continues when you consider to consolidate student debt. Once school’s out, the creditors who have issued your loans will come a-calling. Student debt can be overwhelming, especially if the debt came from multiple companies, all of which are expecting their payment NOW. Fortunately for those students still pining for the dreams of adulthood they’d held dear throughout their schooling, there are ways to consolidate student debt and begin to breathe freely once more.
Back to the Books: Consolidation Defined
Debt consolidation is a term you’ve probably heard before, but unless you took extensive consumer classes in college, its tenets may seem elusive. What does it mean? Well, many students, over the course of their collegiate careers, wind up taking out a multitude of loans on different occasions from different companies. It could have to do with school transfers, an attempt to get money outside of federal funding or unexpected expenses not calculated into prior loans. When you graduate, and all of these loans are collecting different interest rates and requiring separate minimum payments, the process can be confusing and a burden. If you consolidate all of these loans, you are collecting them and selling them to a different company. That company now turns around and pays off all of your loans, leaving you to pay them back the total balance. Now, though, you are only making one payment to one company every month.
The Upside to Consolidate Student Debt
It seems pretty simple, but aside from a more easily understandable process, what do you get out of it? Most people don’t understand the effect this has in the aggregate, and so become wary of student loan consolidation processes. The initial concern for many is that the company buying up the debt is going to charge a fee upfront. This may be true. Many agencies do charge a fee upfront to make a profit, and depending on your situation, the interest rate may be a little bit higher than your other loans. That doesn’t mean that overall you’re taking a loss. If you consolidate your student loans, instead of having several payments of several hundred dollars each, you’ll have one manageable payment. By paying interest on only one amount, you wind up saving money versus paying different interest rates on a multitude of loans. So in essence, you’re helping yourself out in the long-run.
How to Use what You’ve Learned
There are a variety of options if you’re considering consolidating student debt. Try talking to your lenders! They just want to get their money; they don’t care how. Chances are they’ve been in the industry for long enough that they know who can help most effectively. There are dozens of companies looking to help you consolidate. Though you might want to leave the days of studying behind you, don’t forget to do your homework on these firms, to make sure you’re picking the right debt consolidation company for you. This is one class you’ve got to make the grade in.