Student loans will account for more than $1.7 trillion in debt this year. On average, students borrow $36,510 for federal loans and $54,921 for private loans. This data indicates that there is clearly a student loan crisis in the United States.
If you’re one of the millions of Americans struggling with student debt, you have a choice. Student loan consolidation allows you to combine multiple loans into one loan. According to SoFi experts, “Consolidating student loans through refinancing could be a good idea for people whose financial situation – in terms of employment, cash flow, credit and other factors – has improved since then. they graduated.” Here are the main benefits of consolidating your student loan debt.
A high student loan payment can derail your budget. This is especially true if you are just starting out in your career. Student loan consolidation can significantly lower your monthly payments. Lower payments can make it easier for you to save, take vacations, and pay for living expenses.
If you have three student loan managers, that means you make three separate payments each month. Wouldn’t it be nice to have a one-time payment to a loan service provider? When you consolidate your student loans, managing your debt payments will be easier. Instead of paying on different days, you will make one payment per month.
A student loan consolidation can give you more flexible payment options than you had with your previous lenders. Federal consolidation plans may include civil service loan forgiveness, income-based repayment plans, and forbearance/deferral options.
Student loan debt can impact your mind and body. Some borrowers suffer from depression, anxiety and feelings of shame. When your student loans are too high, the threat of wage garnishments and bank withdrawals can negatively impact your life. Affordable student loan programs can take the stress out of paying off debt.
Student loans are available with fixed and variable interest rates. Fixed rate loans have the same rate for the entire term of the loan. With this type of loan, your payments will be predictable. Variable rate loans are dictated by market conditions. They can decrease or increase at any time. When you consolidate your loan, you can choose a variable rate or fixed rate loan.
In many cases, consolidation loans will give you more time to pay off your student loans. Some lenders can extend the term of your loan up to 10 or 15 years. If you plan to pursue higher education, you won’t have to worry about paying off your student loans until you graduate.
When you consolidate your loans, you agree to be solely responsible for your new debt. Co-signers of previous debts will not have to pay the loan if you are in default. This is a good option if you are ready to regain your financial independence.
Used wisely, student debt consolidation offers many advantages. Be sure to consult a financial advisor or debt calculator to determine if this is a good option for you.