Erasing Student Loan Debt And Consolidation Options–How Can Graduates Lower Overall Consolidation Repayment Costs?

When erasing student loan debt, many graduates often turn to consolidation loans as they can lower the monthly payments that must be met on multiple student loan debts, when an individual has had to borrow numerous times during their college career. However, there are mixed feelings on consolidation loans, be they for personal debt or student loans, and many advisers often suggest that graduates who choose a student loan consolidation plan makes strides to budget in such a way that they can lower the overall cost that must be met after the entirety of their loan has been repaid.

Graduates who may have multiple student loans often feel that paying minimum monthly payments on these various loans and combating numerous interest rates will obviously be more expensive than one consolidation loan, as in many cases, student loan consolidation plans may be more affordable. This can be particularly true in many federal student loan consolidation plans as they come with a fixed rate and, again, can offer lower payment options for students who may have suffered a financial setback after graduation or have been unable to find an employment opportunity which will allow them to begin the process of easily repaying multiple student loans.

Yet, what many advisers dislike about student loan consolidation plans is the fact that they can come with a higher overall cost, especially when students are only meeting the minimum monthly payment on these plans. There are even some instances where students may pay more with a consolidation plan than had they simply stuck to their student loan repayment obligations when their debts were separate. While students often are attracted to the lower monthly payment a consolidation loan will bring, a higher principle amount, even associated with a low interest rate, will take longer to pay off in most cases and can cause the excessive costs related to interest payments to rise.

Simply put, many counselors often suggest that graduates calculate how much they will repay if they keep their debts separate and meet minimum monthly payments or budget in a way that allows them to perhaps pay more on a particular loan each month than is required, versus consolidating debt through either a federal or private student loan consolidation plan. There are online student loan consolidation calculator’s and with a fixed interest rate on federal student loan consolidation plans, in most cases, students will be able to figure out the overall costs of meeting their student loan repayment obligations separately as opposed to consolidating.

However, if students do still turn to a student loan consolidation plan, either for the lower interest rate, lower monthly payment, or due to the fact that they simply cannot meet the total sum of payments that are due when they keep their loans separate, there are ways which students can lower the overall costs associated with a student loan consolidation plan. Understandably, each student’s consolidation loan will be different, especially if a student chooses with a private student loan consolidation plan, yet, students who can budget their personal finances in such a way that they will be able to meet more than the minimum monthly payment on their student loan consolidation plan have been able to erase their debt faster and, obviously, have lowered the overall costs that they had to meet on student loans. While, again, this may not be an option for some cash-strapped graduates, but for those who are in a position to meet a higher payment on their loan, as long as there is no penalty for doing so, may be able to not only erase their debt faster but find themselves student loan debt free at a much lower cost.