College graduates have been turning to low interest student loan consolidation plans in order to better manage student loan debt after graduation. Many college students must acquire some form of student loan debt in order to meet the rising costs of college tuition, but for those who have acquired a large amount of debt, repayment can be quite burdensome.
However, low interest student loan consolidation plans are available to help individuals who have student loan debt and there are also a variety of other repayment options that students are using to manage their college loans. Typically, federal student loans have some of the lowest interest rates when it comes to student loans or consolidation plans. While someone who may have a good credit score might benefit from a private consolidation on their student loan debt, federal student loan consolidation rates are usually fixed and can be more affordable.
Yet, there are many financial advisers who stressed the importance of looking over one’s personal student loan debt situation before committing to a consolidation loan. While private student loans cannot be consolidated under a federal student loan consolidation plan and unsubsidized federal loans cannot be consolidated with subsidized loans; consolidation may make little difference if a graduate has a mixture of student loan debt. There is the problem, though, that an individual who only has a few sources of student loan debt and uses a consolidation loan, may find they pay more money over the long run.
A college graduate must first ascertain whether consolidating will be in their best financial interest. If there is a high amount of college debt involved from various student loan sources and a graduate has had trouble repaying these separate loans, in that case, a consolidation may be helpful. However, financial advisors who are against consolidating say that in cases where there are a few sources of debt, paying these college loans separately can be cheaper over the life of repaying these loans.
While again, it will be based on an individual’s personal student loan situation as to what interest rate they obtain for a consolidation, students may want to explore other options outside of consolidating. There are income-based repayment plans and forbearance programs for certain types of student loans, which may be beneficial for someone who has trouble repaying their debt. However, graduates who run the risk of missing payments on their loans or defaulting may benefit from a consolidation even if they may pay more overall.
Graduates who may be having trouble making their student loan repayments or who are concerned that it could become troublesome are often advised to talk with their student loan lender about various assistance plans. However, to avoid unnecessary costs, many financial aid counselors advise students to pay more than the minimum requirement on their consolidation loan if they wish to pay off their student loan debt faster and at less total cost.