Loans that offer consolidation options for graduates who have student loan debt in place can be helpful for those who may be facing delinquency on their debt obligations or potential delinquency as a result of being in a position where they cannot meet monthly payments that are required on student loan debts after they have exited college. This is something that can be common for students who have graduated recently due to the fact that the job market has not exactly provided all of the opportunities which may have been needed for graduates to enter into a job where they have a stable income or an income that will allow them to meet these student loan costs.
Yet, some factors that students need to consider when looking at consolidation options are whether affordable repayment plans are in place and what costs may arise for students who are looking to consolidate multiple loans into one place. Some graduates may find that they can get a consolidated loan at an interest rate of anywhere between 4% to 8%, but these rates could obviously be higher if a student has specific types of loans or in some cases students may opt to consolidate debt with a private lender and this would obviously impact what rate they receive on a consolidation loan, as their credit score and financial history may be factored into this particular type of consolidation option.
Simply put though, since the interest rate a student receives will be individual to their specific situation, this is where students will have to do research on their own to see what rates are available for their personal situation and then calculate how much they will pay overtime when these interest rate payments come into play. Obviously, this will give students a better idea of the overall costs they will have to meet when they are looking to consolidate loans as a way to fund more affordability, as there are some graduates in a position where consolidation could potentially make the overall costs or even current monthly payment costs less advantageous than keeping their loans separate.
However, for those worried about missing payments or becoming delinquent on their loans, there are some options that may be available in specific instances, like those who have federal loans, but some programs may require that students consolidate multiple loans before these programs can help. As an example, some students have been required to consolidate their debts through the federal Direct Loans program before they can take advantage of opportunities like income-based repayment plans or forbearance options, but for students who are running the risk of missing payments, this route may be favorable so that they can avoid doing damage to their credit score.
Some students may be able to get a better rate on a private consolidation loan though, but this is where advisers often caution students as there may be problems related to interest rates on these loans as well. While many lenders who are working in the private student loan industry are offering fixed-rate loans, they may not be as affordable as federal loans or consolidation options, but again this will depend on a student’s situation. Yet, what students must remember when affordability is an issue is that even in the short term, debt consolidation can be helpful when it comes to monthly payments in certain cases but it could cause the overall cost the student has to pay to increase. This needs to be factored into a student’s considerations as it will be a personal decision on the part of each graduate as to how they handle their student loan debts and seeing whether that consolidation will be in there personal best interest.