One of the more popular forms of student loan debt relief is consolidating various loans into one consolidation plan as a way to lower monthly payments, combat only one interest rate, and essentially provide less stress to graduates who may not be in a financial position to meet the entirety of their student loan obligation costs. However, while student loan consolidation can be helpful for some, there are also benefits that may be gained through alternative programs and recent tax deductions that may help those who are currently repaying student loans.
When it comes to student loan debt consolidation plans, students are typically in a situation where they must seek a private student loan option for consolidation or a federal student loan consolidation plan, which again, can provide further options for those in need of affordability. While private student loans cannot be consolidated under a federal consolidation loan for college debt, many students may simply have one form of student loan debt or another, which could make this decision much easier.
While federal loans can be consolidated with private student loan plans, many students choose a federal student loan consolidation option because it can be more affordable in most cases. However, this is an area where advisers suggest that students look at their personal student loan situation and the options for consolidating these debts, as they pertain to interest rates and repayment opportunities. Yet, one of the benefits of consolidating student loans under a federal plan is the fact that income-based repayment plans, forbearance options, or even student loan forgiveness may be offered if certain conditions are met.
While these plans can be more helpful for students who are in a situation where they run the risk of missing payments, there are also some counselors who would suggest that students explore options of repaying debts separately. Consolidating various student loans into one debt obligation can be more affordable in terms of monthly payments, but there are overall costs that need to be considered as a longer repayment timeframe will likely increase the amount students must pay when interest is factored in.
In these cases, students have been able to budget and formulate a repayment plan that will allow them to combat these loans separately, which can be easier to erase in some cases, but again, this will depend on a student’s financial situation and the types of student loans they have. However, many students may be able to find some debt relief this year as there are tax deductions that can be used by those who are repaying student loan debt.
While students must meet certain qualifications, it has been reported that those who are repaying education loans can deduct up to $2500 of the interest that was paid on a student loan, which could help reduce taxable income for current students or graduates who are making payments on their loans. Again, this is only helpful for loans that were used for educational purposes, but with consolidation options, alternative assistance for college loan repayments, and this tax deduction, students could find more relief from the burden of repaying college loans this year. However, since a student’s loan debt will differ from one to another, graduates must look at these options and their personal situation to make sure that these plans will be both affordable and in their best interest financially.