Being a student who is in dire financial straits, it’s as easy as ABC to get students loans. With just a few clicks of the mouse or a few signatures on some forms, voila you just have to sit back and relax until the money is sent to you. The reality and the complication of those few mouse clicks and signatures become apparent by the time graduation closes in.
And if they don’t know better, they’ll find themselves jobless and drowning in debt after graduation! And when that time comes most of them are willing to give up just about everything to have their way out. If before they found they are shouting for student loans. Now their mantra is “consolidate my student loans!”
“How will I consolidate my student loans?” This is a major trend among student debtors. But it is both a curse and blessing depending on how one use it. Usually, student loan consolidation is different for federal loans (these are the loans funded by the government) and private loans. Consolidation may not always be the key for better payment schemes, but in most instances it is convenient and helpful to do so. Deciding to consolidate loans can either make or break a student.
There are only instances when consolidation is the right step for you. For one, if you need to cut your monthly payments due to financial constraints, it can be very helpful. Another case would be when you have a lot of loans with floating interest rates. Locking all of them up in one low interest rate would work to your advantage. However this will not always be the case.
When will “consolidate my student loans” break you? For one, consolidation may at first look as if you’re saving a lot because you’re paying lesser than before. But most of the time, the relatively longer terms of payment accumulates greater interest to pay that in the end you’ll end up paying more interest than when you opted to pay all your loans individually. Especially now that more and more repayment schemes and programs that will effectively cut the burden of such loans.
Another big no-no would be to consolidate private loans and federal loans. Federal loans are becoming more and more student friendly- they try to as much as possible cut the debt and to custom fit it to the situation of students. As opposed to private loans that sometimes don’t even allow loan forgiveness- presumably because it is business as opposed to those offered by governments and educational institutions.
It should always be remembered that liabilities in whatever form like student loans require careful deliberation and sound decision. After all, getting money from loan providers is not the end of the difficult decision. The difficult part comes in when you finish using the money and when you finish all the readings and exams, and then you realize that you’re in the real world where there’s no free lunch.
The most important thing is to be able to arrive at the decision where “consolidate my student loans” would enable you to translate everything that you’ve learned from school- make the most logical and sensible decision for the greater good!