REVISED March 6, 2010
While struggling through college and postgraduate studies it is common for students to face large student loan debt. Student loans become payable six months following the day after final graduation. Trying to pay back each loan individually is very costly and there is a better way to pay off your college debt. Oprah did a piece on College – Is it worth the debt.
Refinancing student loans is a way to decrease your overall debt and make one monthly payment. Refinancing school loans means consolidating school loans into one loan, which allows you to pay off all of the individual loans. This means the size of the consolidation loan is equal to (and it can be greater than) the sum total of all your loans. When you consolidate school loans, you can reduce the cost of your total debt by as much as 40% because of the lower interest rate on consolidation loans.
Anyone who has at least $10,000 in federal student loans is eligible for a federal consolidation loan with low interest rates, payable over thirty years. If you consolidate school loans in a federal consolidation loan the interest rate will often be lower than a private consolidation loan. Private loan consolidation is something that can become expensive so take a time and visit these helpful resources and really make sure that is the best option for you.
Defaulting on student loans, whether private student loans or a federal school loans, is a very good way to find yourself with a very poor credit rating. How can you avoid something like this happening to you? Look into a debt consolidation loan for your school loans during your six-month grace period after graduation. If you consolidate school loans, you can avoid falling into the trap of loan payment default, which leads to problems that are even more serious. The Department of education had an interesting press release on student loan default rates increasing.
The earlier you become educated about the student loan, financial aid and school loans, the harder you will work to pay off the student loans as soon as possible, thus paying less interest. Remember to to do as much research and compare consolidation offers before you make the important decision on whether or not to consolidate student loans you took out while attending college.