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Student Loan Debt Consolidation

The type of job you can get and the lifestyle that you can make for yourself is very often influenced by the type of education you have received. Unfortunately, however, a good education does not come cheaply, and many students take out student loans to help cover the cost of their expenses.  Once school gets out, recent graduates are faced not only with the overwhelming stress of making it in their new chosen career field, but also the stress of figuring out how to repay their debts.  Student loan debt consolidation may help in some cases.

Start by taking a look at what is required to qualify.  If you do not meet eligibility requirements, it is a waste of time to apply for student loan debt consolidation.  To qualify to consolidate federal student loans you can no longer be enrolled in school (which is generally defined as being enrolled in school less than half time), you have to be in the “grace period” of the loan or actively repaying it, and meet the minimum loan requirement of the consolidation company, which typically is $10,000. 

The rules for private loans are different than federal loans, as federal loans have some advantages. The interest on federal loans is tax deductible, the loan can sometimes be forgiven, and payments can be deferred if you go back to school.  You would lose the federal benefits if you combine the federal loans with private ones during your consolidation process, so take care to keep them separate.

Approximately 50% of college graduates take out student loans, on average in the amount of $10,000.  Since rates on the loans are around 3-4% a lot of money can be saved when taking advantage of student loan debt consolidation at a lower rate.  Plus, just like any other debt, having a large amount of these loans can influence your credit and future purchasing abilities, so it is important to get the debt paid off as soon as you can.  If your debt exceeds 8% of your income, it can have a negative effect on your credit report, which in turn will make it more difficult to qualify for future loans. This can make it difficult to buy a home, get a loan on a car, or take out any large loan amount once out of school.  It may even cause you to have higher interest rates on your everyday credit cards.

You should take the time to understand everything before you start to fill out the applications, especially if this is your first time applying for a student loan and/or you have questions about the process.  In order to compare loans accurately, you will need to understand interest rates, fees, and the repayment schedules.  Online sites may offer you advantages by having online applications, no application fees, or waive credit checks.

The process will definitely become easier as you understand how student loan debt consolidation works and how they affect your credit.  These loans will stay on your credit report for years after graduation, so it will be easier to get other forms of credit later on if you make good financial decisions now.  Plus, learning the tricks to having good credit early on will make all the difference in how your credit score affects you in the future.

Debt Consolidation

Debt Consolidation Loans

Student Loans

Student Loans Consolidation


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