Student loan debt consolidation when federal student loans are in place can offer affordability options and further repayment plans for graduates who may need either a lower monthly payment on their debt obligation or options that could allow them to erase their debts in a timely manner and save on overall costs. However, when it comes to choosing the best repayment option for college loans, students will have to review not only their current financial situation, but also their student loan debt predicament and what opportunities debt consolidation may offer to help them avoid missed payments and erase their debt as quickly as possible.
Understandably, after graduation, students who have multiple federal student loans or a combination of different loans usually feel that consolidation is either necessary or, in some cases, almost required as a way to find affordability in terms of monthly payments. Yet, this is where students must take a close look at their student loan debt situation due to the fact that some loans, like private and federal loans, cannot be consolidated under a federal student loan consolidation plan, and if only a few, low principal student loan debts are in place, payment plans outside of consolidation can be helpful. Students may be able to budget in a way that will allow them to focus money on one particular loan, while meeting minimum payments on others, and as these principal amounts will be smaller if the debts are kept separately, there are some students who have been able to erase these obligations faster.
Yet, the students must decide whether they need to find monthly payment affordability or if getting out of debt quickly and lowering costs related to interest is their primary concern. Ideally, both of these options should be considered, but there are some instances where students simply cannot have a low monthly payment and get out of debt quickly as well. There have been some graduates who consolidate their debt as a way to get a lower minimum requirement and interest rate on their loans but pay more than the minimum requirement each month, which again leads to a lower repayment timeframe and lower cost related to student loan debt.
Also, Bankrate.com advisor Steve Bucci stated in a recent article that students may be able to, “…tinker with different time frames to see how much it will cost to pay off [loans] early,” and went on to say that, “Periodic payments will probably save you some hefty interest charges.” Essentially, students who may be able to afford more than their minimum monthly payments will, obviously, save money in the long run on interest rates, but even if a debt consolidation loan is used, applying more money towards the monthly payment obligation a student is required to meet will also help reduce not only these interest charges but can help erase debt faster.
There are cases, though, where students simply need a lower monthly payment to avoid missing these debt payments for multiple loan obligations, but exploring alternatives to student loan debt consolidation related to federal loans is necessary. While consolidating federal loans can also offer students opportunities to either enter into forbearance or participate in an income-based repayment program, graduates need to look at whether consolidating is necessary to find more affordability in their monthly payment plan, or if loans may be kept separate or, even consolidated, but a higher payment can be met each month so that these debts can be paid off much faster.