Consolidating Your Way Out Of Student Debt

When college is over and you are left with multiple student loan repayments and sometimes even in debt, consolidating your student loans will help manage your loan repayments and even help save some money. Though consolidating your student loans can be found very useful there are different factors you should take into consideration before making a decision.

Consolidating Student Credit Card Debt

It is important to know that when you join a debt consolidation program you will consolidate your debts that have aroused from student loans you have applied for during or before your studies. Most debt consolidation service providers do not provide programs for consolidating credit card debt. Do some research covering the topic of personal debt consolidation solutions for different solutions and ways to pay off credit card debt.

Consolidating Student Loans that have Fixed Rates with Variable Rates

When you were granted the student loan a repayment plan was also given to you. Federal student loans such as a Perkins Loan offer fixed and low interest rates. Consolidating these types of loans with other variable interest student loans will not be beneficial. The interest rate you are quoted will not exceed a fixed 8.25% interest rate, whether or not the average of the interest rates you have to repay is higher than 8.25%. Therefore, logic dictates that it is best to consolidate high variable interest debts. Doing so you will enjoy a fixed, and if lucky, averaged lower rate.

Consolidating Federal Student Loans with Private Student Loans

These two types of student debts should not be consolidated as one. Further more there aren’t many, if any organizations that will allow you to consolidate these loans. If you are in debt because of private student loans and federal student loans you may still consolidate them, but separately.

Contacting a Debt Management Organization

Finding yourself in a debt problem can be very surprising and unexpected even though it has built itself in the course of several months or years. It may feel like waking up one day and just realizing everything you thought was ok, isn’t any more. This is a fact so don’t get upset and DON’T PANIC!

Who to Turn To?

When you realize you have a debt problem, contact a debt management organization. Chances are that the amount of debt you are in is still manageable and reducing credit card debt can be achieved in a cost efficient way.

Debt management organizations contact your creditors and try to negotiate interest rates and payment terms on your behalf. They actually do the calculation and financial work for you. You transfer them your salary and they manage the payments and reduce debt for a fee. Before signing the agreement they will let you know approximately how much will be left over for other expenses and design a monthly budget that you will be satisfied with.

People Build Up Debt by Trying To Get Out Of It

There are other proper solutions to get out of debt. A debt management service will not always accept your account. People who do not get proper advice but need to eliminate debt may find themselves doing the opposite. By taking a wrong course of action one might worsen his debt situation and credit score.

For example, a debt consolidation loan should be applied for only after there isn’t any other debt solution available. Further more, the interest rate that is quoted should be lower than the interest on the debt needed to be paid, otherwise it will be pure loss.