Student loan debt is something that many students are carrying with them as they graduate college and enter the “real world.” However, student loan debt is not something that has to be burdensome throughout a college graduate’s life, seeing as how there are affordable ways in which someone can control and pay down their student loans. One of the more common ways of dealing with various student loans is through a student loan consolidation plan, which can be quite affordable and come with a low interest rate.
Low interest student loan consolidation plans are often sought after by those who have various student loan debts, which would obviously require multiple monthly repayment plans. Many students feel that by having more than one student loan debt outstanding, they stand to benefit from a student loan consolidation because all of their debt would be rolled into one consolidation loan and they would only be paying one interest rate on this debt. This can be true for some college students and their student loan debt, but many financial aid counselors and advisers often warn against this type of consolidation or at least set some guidelines to be considered before college graduates consolidate their student loans.
While it is true that consolidating student loan debt will put all of one’s money owed under one interest rate, there are cases where this can be less cost-efficient than paying off student loan debt separately. In cases where someone only has a few student loans outstanding they may benefit more, and save more money over the repayment lifetime on their student loans, if they form a repayment plan to combat their student loan debts separately. By putting a larger principal amount on even a small interest rate, the repayment lifetime may be extended and interest will be able to accrue on a higher amount, which can lengthen the repayment lifetime of this debt and cost more.
Also, certain types of student loans will simply not consolidate, seeing as how Federal student loan interest rates for student loan consolidation are typically lower than private student loan consolidation rates, but private student loans cannot be consolidated under a Federal student loan consolidation plan. Also, subsidized and unsubsidized student loans will not qualify for a consolidation loan as these types of student loans have different terms and conditions so they will be kept separate.
If a college graduate is considering a student loan consolidation, they must look at the types of loans that they have to make sure they will consolidate under a student loan consolidation plan before they proceed. If they have types of loans that can be consolidated, a student must then simply sit down and figure out how much they would pay, factoring in time and interest, if they were to consolidate their student loan debt versus keeping their debt separate. By simply doing the math for their specific student loan situation, a college graduate will easily be able to find out which route will be in their best financial interest in the most cost-efficient way for them to deal with their student loan debt.