College debt is often something that is unavoidable as the necessity for student loans increases with the rising college tuition year after year. Many people who graduate college often have various student loans which they feel are better managed if put into a student loan consolidation.
Low interest student loan consolidations are available with federal student loans as federal student loans interest rates are often set and don’t account for someone’s credit score. Private student loans do offer consolidations, however, the rate that you get on this loan will often be dependent upon your credit score and many college students who are exiting a university may not have built up a good credit score to the point that they can get a low rate.
It’s for this reason that many people will borrow federal student loans seeing as how they are easier to obtain and they come with more affordable interest rates, in most cases. Yet, anyone who is considering a student loan consolidation must look at their financial situation and make sure consolidating their loans will be in their best interest.
Someone who may only have a few student loans outstanding might not benefit from consolidating due to the fact that a student loan consolidation can sometimes cost more over the long run. Even at a low interest rate, a student loan consolidation is essentially putting all of your student debt onto one interest rate, which gives that interest a larger sum on which to accrue.
Many people may benefit from simply paying student loans separately due to the smaller amounts on those separate interest rates. Choosing the best path for you is going to require you to sit down and figure out how long it will take you to repay your student loans separately and how much it will cost, when interest is factored in, versus the time and amount a student loan consolidation will entail.
This will be the only way that you can find out what will be the most financially beneficial route to take, so it’s in a college graduate’s best interest to do the math in this case and seek what is going to be the most affordable option.