Student Loan Debt Consolidation

Student loan debt consolidation is actually a blessing in disguise, and happens to also be the best financial solution for most of the students that are graduating out of college with huge debts on their shoulders. If you are dealing with multiple student loan debts, then the best thing that you can do is find a way to consolidate them all into a single debt, which will provide you with:

- * Only one debt to pay rather than multiple monthly payments to make,

- * Only one lender to work with, rather than multiple lenders across multiple loans,

- * A lower interest rate, rather than several higher ones,

- * A longer loan term because you are refinancing,

- * A lower monthly payment, because you are dealing with a longer loan term and a lower interest rate,

- * A lower amount of debt paid overall since the interest accrued will be far less,

All of your student loan debt under one umbrella

Obviously there are a number of benefits that are associated with consolidating all of your student loan debt into one single loan, or putting it all under one single umbrella. By putting all of your student loan debts under a single umbrella you are going to be dealing with a much lower monthly payment, with a drop by about 40% if not more, and a much lower interest rate that will prevent you from having to pay exorbitant amounts of accrued interest at the end of the loan term.

Create a Proper Financial Plan

First thing is first: Once you have graduated from college you are going to need to put together a firm financial plan. It is time for you to sit down and put together a sturdy budget that is based on your average income and that incorporates all of your monthly expenses, including all of your student loan debt and other debts that you may have. If it is possible, you should avoid extra expenses during the first couple of years post graduation so that you can focus on chipping away at your student loan debt. When you make prompt student loan payments you will be able to pay more off more quickly with less interest accrued in the end.

Reduce Interest Rates

If you want to lower your interest rates on your student loan debt, there is an alternative that is well worth exploring for yourself. This is to take all of your student loan debt and have it be consolidated into one single fixed interest loan with one single lender. The purpose behind student loan debt consolidation is to help you decrease the monthly payment amounts that you have to pay, allowing you to pay your student loan debt off much quicker in the process. If you only have one single student loan, then student loan debt consolidation won’t change anything, but refinancing may. If you have several student loan debt loans to deal with, then consolidation could be the answer that you have been looking for.

Take these two approaches suggested above and run with them. They will allow you to reduce the amount of interest that you pay for your student loans while cutting down on the student loan payments that you make every month. If you want to overcome your student loan debt, then this is the way for you to do it.

The First Step

The first thing that you are going to want to do is to get the ball rolling by filling out the necessary loan request paperwork. The necessary documents for student loan debt consolidation can be found through most lenders. If you already work with several lenders regarding your student loan debt, try choosing a lender that is already familiar with you and ask them for the necessary application paperwork. The necessary documents for your student loan debt consolidation application will include a promissory note for you to fill out in full.

Application Process

Within about four weeks of filling out your application, you should know the status of your loan. Some lenders will work magic by providing you with an answer much sooner, especially if you already have a loan with them. Once you know what your status is regarding your student loan debt consolidation loan, you can take the next steps. If you are approved, then the lender that approved you is going to pay off all of your other loans, so that you only have to make one single loan payment per month to them.

Considerations to Make

When you are choosing a financial institution to help you pay off your student loan debt, make sure that you are choosing a consolidation opportunity that is actually going to benefit you. What this means is choosing a student loan debt consolidation loan that offers a longer term, lower interest rates and a lower monthly payment. If you’re not benefiting significantly from a student loan debt consolidation program, then you’re just wasting your time and money and building up more debt in the process.

Consolidate your Student Loan Debt

After you have graduated out of college, dealing with this level of student loan debt is going to pose a problem. If you do not get a job quickly enough or start your career quickly enough, you could end up with hefty interest charges and late fees that make your student loan debt mount even more quickly. The result is, either you work the courage up to consolidate your student loan debt, or you dig yourself into a deeper debt hole – And it’s your choice to make.

Consolidating your student loan debt is going to be one of the best decisions that you make in regards to your financial future when you are fresh out of college. If you can find a way to consolidate your student loans, then you could end up with less monthly payments, less due dates to juggle, less lenders to work with, lower interest rates and less debt to pay off in the grand scheme of things.

Consolidating Federal and Private Lending

Consolidating your federal student loans and consolidating your private student loans is something that should be done separately. This is because both have different types of interest rates and other characteristics like benefits that make them unique. If you combine all of your student loans together, both federal and private, then you may lose out on some of these benefits. By consolidating the same categories together, you may end up with two different debt consolidation loans, but they will certainly pay off in the end when you have lower interest rates and better benefits for paying off your student loan debt.

The costs behind a college education are rising by about twice the typical inflationary rate, and as a result of the state of the economy, it is only becoming increasingly challenging for most students to find the financial help that they are looking for in order to address their education needs.

Because the number of available scholarships and available grants has declined significantly in recent years, many students are now unfortunately forced to finance their education using credit cards and other methods of lending. With lending interest being as high as it is right now, this can create a very scary situation for many students.

Here are some ways that you can pay off student loan debt.

1 – Work Study

Look for a work study program at your campus’ employment office.

2 – Internships

Look for an internship during your college summer vacation.

3 – Financial Aid Opportunities

Go to the financial aid office on campus and find out about financial aid programs designed to help students.

4 – Apply for Scholarships

Try to apply for as many different college scholarships as you possibly can, because the more that you end up applying for, the better that your odds are going to be.

5 – Apply for Grants

Apply for government, state and federal grants such as the FSEOG which is a supplemental education opportunity program, the Federal Pell Grant, and the LEAP grant which is the Leveraging Educational Assistance grant.

6 – Volunteer

Perform volunteer work as a means of reducing your student debt by asking to exchange your time for a reduction in what you owe.

7 – Investigate Opportunities for Consolidation

Start to investigate opportunities for consolidation of your student loan debt. After you graduate you may be able to consolidate your student loan debt, combining all of your loans into a single loan with a lower interest rate and a longer term for repayment. It is possible for you literally remove hundreds of dollars in payments per month off of your student loan debt through the consolidation of your student loan debt. If you are feeling overwhelmed by student debt, this is a worthwhile option to consider.

Consolidation

If you’re like many people you have several different student loans. Consolidation can offer many benefits. Having one payment every month as opposed to several can save a lot of hassle. It prevents you from forgetting one of the payments which could result in an increased interest rate. Making one larger payment every month is a good way to terminate student loan debt much faster than you ordinarily would. Often you can save money with a lower interest rate when you consolidate, giving this option another benefit.

Direct Payments

If you set up direct debit payment option you will be able to terminate your student loan debt with ease. A lot of loan companies will offer discounts on the loan amount by setting up direct payment options. The payments seamlessly come out of your account around the same time every month. The loan programs receive their money, you don’t have to write any checks or get any money orders, and you don’t have to worry about having late payments or penalties with this option.

Work

If you’re able to pick up extra hours at work and put the overtime or extra money towards to your student loans, you’ll be able to terminate your student loan debt much more quickly. Even putting just $20 a week extra towards your loan debt can add up to almost $1000 over the course of a year. If you’re still in school many colleges will offer the opportunity to work on campus and applying money towards your loans. This can go a long way in getting rid of the debt.

Social Programs

Many government funded jobs will help you pay off your student loans. For example, if you take a position with the Peace Corps, the organization will help you terminate student loan debt. They may not pay the loan off in it’s entirety, but it will greatly reduce the amount that you need to repay out of pocket. This can be a win-win situation for you. You will be given the opportunity to do greatly rewarding work, pay down the student loan debt, and think about your next career move all at the same time. Working for a social program will look great on a resume too.

Option One- Public Service Loan Forgiveness

One way to qualify for student loan debt relief is to take advantage of the Public Service Loan Forgiveness Program (PSLF). This program will help people who work in public service positions pay down their loans with substantially less out of pocket. To qualify you need to work for a nonprofit, tax exempt organization that is not political or religious in affiliation. Working for the federal, state, local, or tribal government, including military service, or serving in the Peace Corps or AmeriCorps will also help you qualify. There is no application process as of yet, but your employer will able to point you in the right direction.

Option Two- Income Based Repayment

The Income Based Repayment program is a new program that will help people with student loan debt relief. The idea of this program is that a sliding scale is used to determine the amount of money that is to be paid back in student loans. Since it’s based on a sliding scale there are several possibilities to enter the program. If you make more than 150% above the poverty level for your situation, then no more than 15% of that overage would go towards your student loan payments. If you earn less than 150% of the standard poverty level then your payments would be $0. Note that this program may not cover any interest associated with your loans, so you may still be responsible for that. The program will be available beginning in July 2009.

Option Three- Income Contingent Repayment

This program is similar to the above option, but has some key differences. With this plan there is more flexibility with your student loan debt relief. Every year your adjusted gross income is used to calculate what your monthly payments will be for the next year. You will not be required to pay more than 20% of your monthly income. The monthly payment may vary year by year, but it was designed to help by not creating additional financial hardship. The income contingent repayment option is available for up to 25 years, so you will have plenty of time to repay the loans. Note that with this option you may be required to pay taxes on the amount of the loan that is forgiven.

One- The National Defense Student Loan Program

One of the first places you should turn for student loan debt help is the government. There are numerous programs available to help forgive student loans. You may qualify for one or more of these programs, you just have to look in to them. If you work in a government job, teach in a low income school, or work for the civil legal aide system you can have part, if not all, of your loan forgiven. You can find information on these programs by visiting www.finaid.org and look for loan forgiveness programs. They have an extensive list of agencies that will help with this.

Two- Private Lenders

If you don’t work for a qualifying company or agency for the forgiveness programs, consolidating your student loans may be the best way to get student loan debt help. Consolidating the loans will make it easier for you to pay the loans off for several reasons. First, you will only have one payment to contend with each month. Second, most of the time you get a reduction in your interest rate, possibly saving you thousands of dollars on the original loans. Before you decide to consolidate though you need to make sure you’re doing your research. Some consolidation services will offer you a lower monthly payment by extending the life of your loan. This can actually add more on to the loan amount by increasing the overall interest you pay over the lifetime. The best place to start is to contact your lender directly. Often times they will be happy to offer consolidation programs.

Three- College

The next place to look for student loan debt help is to the financial aide office of the college you attended. Even if you’ve been out of school for some time, they will still have information to offer you regarding consolidation. Call the school and make an appointment to see someone in the financial aide office. Ask lots of questions. They can offer you useful information on repayment programs, forgiveness programs, deferment, consolidation, and refinancing. All of these options offer practical help in reducing your overall debt load.

One- Loan Counselors

A loan counselor is trained to go over the terms of the loan and help find ways to save you money. They may have a variety of option to suggest. Setting up a new payment plan can take some stress off you. They may also have more pull with the lender in trying to get interest rates lowered, or loan payments deferred. You can find student loan debt counseling services in the financial aid offices of most colleges and universities. A quick internet search can yield many resources as well.

Two- Private Lenders

If your loan is held through a private lender, you may be able to get relief or student loan debt counseling directly through the lender. Many times the lender will work with you on the loans. You may be able to get a forbearance, which is basically a way to suspend payments for a short time if you are experiencing a financial hardship. They may work directly with you to lower the interest rate which could potentially save you a lot of money. Most private lenders who deal with student loans will have plenty of resources available to help you with student loan debt counseling. They would rather see the loan paid, even if at a lower rate, then see it go completely unpaid.

Three- Student Loan Counseling Services

There are agencies that can help with all debt, and there are agencies that specialize in student loan debt counseling. If you are considering consolidating or seeking counseling you will be much better off finding a service that specializes in student loans. They will know more about the programs available that were designed specifically for student loans. They may be able to offer services other than consolidation that can meet your needs. You can find many great student loan counseling services directly through the school (even if you are not currently enrolled). There are also several resources available at www.ed.gov. This site is dedicated to providing valuable information on all sorts of student loans.

Which ever counseling service you choose, be sure to check their references and their standing with organizations such as the Better Business Bureau. For every great service available, there are even more service providers with their hand out just wanting your hard earned money.

Tip One- Create A Settlement Fund

If you foresee the need to settle student loan debt in the future, it’s a good idea to start a settlement fund. Prepare a budget and set up a savings account for the sole purpose of settlement. You must be able to commit to depositing money each month, or week, in to this account. This will make it much easier to come to a settlement agreement later when you can show the borrower that you have a lump sum of money to offer.

Tip Two- Keep Accounts Current

If you’re not already behind on your debt, keeping it current will go a long way in settling student loan debt. The lender is much more likely to work with you if you have good payment history. You will also need to keep in mind that they may not be willing to work with you unless you can prove a financial hardship. If the lender was willing to settle every debt just because they were asked, they wouldn’t stay in business long.

Tip Three- Be Realistic

When you attempt to settle student loan debt, you need to be realistic in what can and can not be done. You won’t be able to call the lender and just ask then to accept ten percent of the debt owed. The same applies if the debt has gone to collections. If your debt is current you can expect a reduction of no more than thirty percent generally. If the debt has already gone to collections you can usually get a settlement of about fifty percent of the debt.

Tip Four- Forgiveness Programs

Check to see if you qualify for any forgiveness programs when you try to settle student loan debt. If you work in certain fields you may qualify to have a large chunk of you student loans forgiven. This will make a settlement offer much easier to get. Teachers, government workers, legal aide workers, and several volunteer organizations offer qualifications for forgiveness programs. Research these before you make a settlement offer.