Anyone who has been in a situation of trying to get out of debt probably knows that there is no “perfect” solution to that dilemma any more than there is a perfect solution to a student loan debtor’s dilemma. The best that can be hoped for is to find a consolidation loan that will allow the alumni to enjoy a standard of living based on their degree and still be able to pay off the many student loans that were required to finance that education.
That said, you should understand the term “student loan consolidation,” which, like any other consolidation, means that you take your debt and combine it into one lower, easier monthly payment. The difference is that only student loans qualify for a student loan consolidation; That means you can’t pay off your credit cards, car, or furniture with a student loan consolidation.
There are several different programs that allow students to consolidate student loans, but the best seems to be the Federal Student Loan Consolidation program. First, it has the lowest interest, ranging from 1.5% to about 4.5% with repayment terms of ten to twenty years. Depending on the number of loans you have outstanding, taking out a Federal Student Loan Consolidation can reduce your payments by up to 50% per month. Plus, these loans don’t require income verification or credit reports, so those who just started a new job or will be starting a new job soon and have bad or no credit still qualify to consolidate their student loans.
Of course, there are other student loan consolidation programs available, including direct student loan consolidation, which requires the borrower to have at least one direct student loan, verifiable income, and no adverse credit to qualify. Another type is the Private Student Loan Consolidation, which, while not as attractive as the Federal Student Loan Consolidation, is doable for the former student who has a job and a livelihood. These loans last up to twenty, sometimes thirty years, depending on the lender. Although they carry a somewhat higher interest rate averaging 6-10%, they are still more attractive than the average consumer loan and allow the borrower to get out of their student loans and start life as a tax-paying citizen.
A student who just graduated from college feels overwhelmed and wonders how he’s going to make a life with those student loan payments hanging over his head. Student Loan Consolidation Loans help ease the stress and worry of those loans and give the student the opportunity to start their new life within the scope of their chosen field. It means he or she can buy a car, rent an apartment or buy a house, and get financing for furniture and still be able to pay off all those student loans. It may be a bit difficult at first until the expected income starts to come in, but at least there is a future that will allow a lot of the stress to be removed.