For most of us, getting a college education is a crucial step towards financial success - but it can take decades to get out from under the weight of student loan payments. Even with a good
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The student loans you've relied on to get you through college can haunt you for years after graduation. Debt claims a portion of your paycheck every month, making it difficult to establish financial independence and a comfortable quality of life when school is over.
If you’re struggling with high payments and you can’t seem to get your budget on track, it might be the right time to refinance or consolidate your student loans. Consolidating restructures your payments into one monthly obligation to remove the burden of multiple loans and put you on the path to a debt-free future. Read our detailed reviews of student loan lenders, which will help you choose the right one for your needs.
About 70 percent of all college students in the U.S. are graduating with student loan debt, meaning that 44.2 million Americans are still dealing with past educational expenses. Total debt amounts to $1.26 trillion, and individuals each carry an average of over $37,000 in unpaid loans. One-quarter of all people facing student loan debt will default, putting them in even more serious financial situations.
These statistics illustrate a growing problem among college graduates. Although loans are often necessary to cover the rising cost of higher education, the subsequent debt can make it difficult to reap the benefits of your investment. Many people wind up carrying student loan debt for much longer than they expect, not knowing or understanding the options available for student loan relief.
When you initially begin payments on your student loans, some institutions offer a grace period of six or more months before the first installment is due. Taking advantage of this time to assess your debt and figure out exactly how much you owe can give you an idea of what your future payment structure will look like. Once the grace period is over, however, you could find yourself making high monthly payments and feeling as though you have little recourse but to continue struggling or default on your loans.
If you consolidate student loans, you give yourself a chance to get a better interest rate and lower your payments. Many options offer fixed interest to make payments more stable and predictable. Depending on the lender, you may be able to secure terms allowing you to pay off your debt in less time than your current loans allow. While this system is still debt, it's considered a good debt.
There may be other avenues available besides consolidation to ease the burden of student loans. Lenders may offer various repayment plans with reasonable terms to get you out of the cycle of constant debt. Federal loans come with options to enroll in flexible payment programs based on current income, and your financial situation may make you eligible for debt forgiveness or deferment. Look into these avenues, and make sure to keep up to date with the latest student loan debt articles, prior to pursuing student debt consolidation to see which option is preferable.
If you discover that consolidating your student loans is the right way to handle your current debt, start with a plan. Evaluate the loans you have, looking at interest rates, monthly payments, and terms. Determine how many are private student loans, how many are federal student loans, and what you still owe on each. Use your analysis to assess the available terms and rates from lenders so that you can choose the most reasonable payment plan.
Look at all the available lending options, and ask:
Banks, credit unions, and online lenders differ in what they require from applicants. Credit score usually has the biggest impact on whether or not you get approved, so look for a lender with options for which you know you can qualify. If your credit score is low, you may have to settle for a higher interest rate or take on a loan with longer terms to establish a payment structure for student loan relief. Before you decide which way to go, it's important that you understand your selection of debt relief companies.
Once you’re approved for a student debt consolidation plan, use it as an opportunity to clean up your financial situation. Make a schedule or set reminders so that you never miss a payment. Every payment you make on time benefits your credit score and puts you one step closer to getting out of debt.
If you wish to return to school while still paying off your loans, find out if your employer offers reimbursement for courses related to your job. You may be able to take courses at a discount or for free, and the additional education could help you move into a better position, making it even easier to stick to your monthly payment plan. There are 4 general steps to shedding your student loan debt. Discover more about how to get out of student loan debt and get started on the path to financial freedom.