The Realities Of College Loan Consolidation
By: Jay Anderson
It probably comes as no surprise to you that the costs of going to a good college or university have been going through the roof in recent years. As a result, the majority of students have one or more student loans, with most students having more than one of them to cover all the costs each year.
But soon after graduation, you come to the unpleasant realization that it is time to start paying back those student loans, and you may even be surprised at the huge amount of money you owe. This might seem like an overwhelming task, even given the typically lower interest rates on a student loan.
One of the things you may want to consider to make this task affordable and seem less daunting is a college loan consolidation program. Yes, to an extent it is like borrowing from Peter to pay Paul, but there are benefits to doing that. First, let's look at what happens if you don't do anything and just try to muddle through it.
Say for the sake of example that the sum total of your monthly payments on all your student loans works out to be $800 per month. That is pretty steep when you are just starting out with rent to pay, gas to put in your car, food to put on the table, and just starting out with a new job. Frequently, many students find that that kind of monthly expenditure is just not within the scope of their budget.
You can default on the loans, which many people do. But know that this is going to leave huge negative marks on your credit report, and right now, that is the last thing you need. If you start getting dings on your credit report, it will literally take years for that to come back around and give you a good score.
Have you thought about bankruptcy? If so, forget it. Student loans are not eligible to be discharged by filing bankruptcy. While bankruptcy may be helpful if you have multiple other bills, student loans are not discharged via bankruptcy.
Consider a college loan consolidation program. What such a program does is to allow you some financial breathing room. The consolidation company takes over your student loans, and as long as you make timely payments to them each month, your student loans will be paid on time.
There are two major benefits to this for you. First is that your credit score and credit rating remain intact, since your student loans are being paid back in a timely manner. Secondly, that $600 per month that was the sum total of your student loan payments is reduced by the loan consolidation company to something that is more within your reach, say $400 per month.
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