Nowadays, more and more Americans are burdened by student loan debt. The most recent reports indicate there’s a $1.45 trillion in total US student loan debt, 44.2 million Americans with student loan debt, student loan delinquency rate of 11.2% and average monthly student loan payment (for borrower aged 20 to 30 years): $351.
Taking up collections to offset your unmanageable student loan debt may not be the most effective solution. But you have to do something to get your debt back under control and to allow enough income to live on besides just to make debt payments on.
Consolidation is often, if not always, the best solution to a runaway student debt problem. There is a lot of information available on student debt consolidation on sites like consolidatestudent.loan, but here is a quick overview of 5 possible benefits of consolidation:
1. A single monthly payment
When you have multiple loans with multiple due dates and different interest rates and loan terms, it can easily create confusion. Furthermore, it can be difficult to effectively manage your loans and not miss any payments. One thing consolidation always does is create a single, easy-to-manage monthly payment.
2. Possibly a lower rate
While it varies from situation to situation, you may be able to get a lower single rate than the average rate of your current multiple loans. If you can, that is a very good reason to opt for consolidation.
3. Fixed rate instead of variable rate
Some of your student loans may have variable rates, which could work out for good or bad depending on what the economy does. But a fixed rate would at least bring certainty that your rate cannot go up, and for that reason, is preferred by many. Consolidation gives you the opportunity to gain a single, unchanging rate.
4. Reset deferments and forbearance periods
If your loans are in deferment or forbearance, consolidation will reset you so you can start over again if necessary (which you hope it won’t be). Of course, it will depend on your consolidation lender as to whether future deferments/forbearance periods are possible, so do a double-check (and you may want to wait till your loans are almost out of deferment/forbearance before consolidating).
5. End delinquency and improve your credit score
If any of your loans are currently delinquent, consolidation will immediately eliminate that problem. If you get a more manageable monthly payment after consolidating, that could help you stay out of delinquency going forward. By ending delinquency and keeping up with your payments, you will not only reduce stress and end the collection calls, you will stop hurting your credit score and actually begin to repair it.
Is Student Loan Consolidation for Me?
You don’t want to assume that consolidation isn’t or is the best path forward on your student debt without first carefully assessing your situation.
There are many benefits that can be gained from consolidating to a single, low monthly payment. But there are also certain loan-types that can’t be consolidated, and sometimes, consolidation can result in a higher interest rate.
The key, then, is to explore all of your options. Go over your student loans, write down their rates, and find the average rate so you can compare that to consolidation offers. Take into consideration pay-off time and monthly payment amounts as well, besides fixed/variable rates and other factors.
Do your homework. Consolidation may well be beneficial to you, but you have to invest a little time and effort in researching out the question first before you can know for sure.