For the average American college student, the road to graduation is traveled on a vehicle of inspiration, passion, and diligence – fueled by student loans.
And once you finally make it to the dream-come-true moment of graduation day, all too soon should you wake up to the reality that loans must be settled lest you work yourself into a nasty nightmare of lawsuits, garnishment, and distraught.
That is one harsh reality, faced by generations of students before you. But what makes it even harsher for the American college graduate today is the challenge of a shrinking labor market and an unprecedentedly high unemployment rate. This simply means you need to pay back your loan – on a monthly basis – from funds that you had hoped to start earning right after graduation, but which you still do not have because you are as jobless as before yet already mired in debt.
Learn more on Paying Student Loans
Unfortunately, while you may be willing to wait or bide your time until the situation begins to improve and new jobs become available and accessible to you, the banks or finance companies that lent you the money may not. The loan providers will start to get to you as soon as your study days are over to recover the funds they have lent to you, plus interest through endless phone calls, reminders, and, later, threatening demand letters. At some point, you want to ignore those phone calls, curl up in one corner, and sleep your worries away.
In many cases, a college graduate may owe not just one but several loan providers. He may have taken out loans from both the government and private fund sources. This makes for an even more nightmarish scenario as he struggles to keep up payments in varying amounts, falling due at different days of the month, and worse, still clueless exactly how to deal with them.
If this is where you’re at right now – or where you might expect to be soon after college is over, you may want to consider consolidating your student loans. It’s not really as intimidating as you might imagine. Debt consolidation means literally putting together all your loans and taking out just one loan to pay for all of them. This way, you will deal with only one creditor or loan provider instead of many, and in the process, you may even be able to get a good deal on this single loan. This process may even save up to 50% of the monthly payment you will have to prepare to settle the loan.
Considering the Ballooning Student Loan Problem
Close to US$1 trillion this year according to some estimates – debt consolidation is the lifeline offered even by the Obama administration today. And, going by the rule of physics and economics, whenever there is a need, there is someone to meet that need. In this case, make friends with a student loan consolidation company. It makes good sense to keep the company on you in this matter.
Search the net and you will find several consolidation companies offering to consolidate all your loans into just one package or one big loan that you will take out from them. Choosing the right company to handle your loan consolidation is the next vital step that you need to think about. Look for one with whom a friend or a relative has already worked with to minimize the discomfort and anxiety on your part, although you can talk to several loan consolidation companies and choose the best one among using the criteria to be cited in this article later. You need to be level-headed on this one and try to work for a win-win situation for you and the consolidation company.
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What to Consider
Once you have decided that loan consolidation is your best option to deal with your personal debt burden, you will have to go through the necessary process of deciding which consolidation package you will go for or go with. Now determining which company you should deal with for your student loan consolidation will depend on several factors of issues. You should not just sign up with the first company that offers you a loan to cover all other loans.
Here Are a Few Simple Tips to Help you Start
- 1. There are two possible ways of consolidating your loan – through a federal consolidation program or with a private loan company. Determine which one you need or which will help you best. Keep in mind though that a federal student consolidation loan may not be used to cover a combination of federal and private student loans. Likewise, a private loan company will not allow to approve your loan if the consolidation includes federal funded loans.
- 2. List down your present loans and get the average of the monthly payments and interest rates. You can work this out by using a student loan calculator that is available in most websites of banks or finance companies offering student loans. You will need to have this data at hand in order to present a better picture of your situation to the consolidation company.
- 3. Talk to more than one prospective consolidation company. Once you have the necessary data related to your loan, as mentioned in the previous item, then you are in a better position to request an accurate quotation from the loan provider you are dealing with. The quotation should include total loanable amount, interest rate and payment period.
- 4. Compare the loan plan and payment schemes offered by the student loan consolidation companies. This requires thorough study and painstaking work, but your efforts will pay off once you are able to get the best deal and make it work for you towards clearing out your total debt.
- 5. Be wary of special offers or special deals, and other allegedly add-on service or product extras. Of course, some may be genuine and in fact, give you better conditions. But get to the actual figures – dollars and cents and days and months.
What to Look for in a Company
Seeking out the best loan consolidation package means finding one that makes it easier or more realistic for you to start making the monthly payments. So find a company that will give you repayment terms that is the most flexible and that best address your situation. This, in truth, is the goal and the selling point of the lending company so it should not be difficult to ask about this and to check out the company’s responses.
Remember that although those seeking loan consolidation shares a common experience of debt difficulty, your situations are not always similar, thus what program may be good for your friend may not be feasible for you. And in the final analysis, it’s always up to the borrower whom he or she will go for. Those who have difficulty meeting monthly payments may opt for a low-income monthly payment, high interest, but long payment term option. Those who may be able to afford a higher monthly payment may decide to opt for this in return for low interest and a shorter term paying period.
Which Companies Offer the Best Deal
As mentioned several times before, the best deal depends on what works best in your situation. But here’s a list, not necessarily of the best, but of the most popular (in alphabetical order), as gleaned through research on their respective websites and through student loan forums.
- DebtConsolidation.com
This is the parent company of StudentLoanConsolidation.com, and offers all kinds of debt consolidation program. Known for its responsiveness to borrower’s queries and ability to respond immediately to let you know if you are eligible and qualify for a loan. - Loan Approval Direct
Allows you to borrow even above $100,000 at interest rates that can go as low as 3%. You will be able to reduce your monthly loan payments by as much as 60% with the proper program design. And, you don’t need a third party, such as parents, to vouch for you nor is collateral required. - Next Student
They can craft customized loan packages based on your present financial situation, and they offer a wide range of ways and packages to enable you to pay back the loan. For instance, they have a scheme where the less work experience you have, the less you will have to pay each month. The company also offers the possibility of reducing monthly payments on past educational loans by as much as 60%. - StudentLoanConsolidator.com
Consolidates loans between $10,000 and $50,000, for a repayment period of up to 20 or 30 years. - Wells Fargo Private Consolidation Loan
They deal only with consolidation of at least $5,000 in loans. The maximum allowed amount of loan is $40,000 and $100,000, payable within 15 years.
For all federal loan consolidations, check out loanconsolidation.ed.gov or call 1-800-4-FedAid. For this last option, you might wish to consider Health Education Assistance Loan (HEAL), Auxiliary Loans to Assist Students, Loans for Disadvantage Students, Federal Parent Loans for Undergraduate Students, National Direct Student Loans, Federally Insurance Student Loans, Federal Supplemental Loans for Students, Federal Perkins Loans, Federal Direct Loans, and Federal Stafford Loans.
This is a long list. You need only one of them to help consolidate your loan and, hopefully, rearrange your young life for the better with a new employment and with a more manageable student loan to repay.
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