Student debt has reached an all-time high in the U. of late, with an estimated 40 million people now owing an average balance of ,000, according to credit report company Experian.
With student loans soaring, debt-saddled students and graduates are desperate for any strategy that may help them escape their burden.
If you’re a college student or recent graduate, then you’ve probably thought more about student loans and how to pay them off than you’d like.
With so much information out there, it may be difficult to figure out your best course of action.
Consumers can use debt consolidation as a tool to deal with student loan debt, credit card debt and other types of debt.
You’ll no longer owe the original loans, and since this consolidated loan is new, it will come with a new interest rate, a new payment policy, and new terms and conditions.
After consolidating, you have only one interest rate and make only one monthly payment, instead of having multiple rates and payments.
Simplifying your life is a side benefit of consolidation – the main reason people do it is to get a fixed lower interest rate so they can pay their debt down faster.
The same is true for student loan debt consolidation, except that federal student loans cannot usually be consolidated with other debts.
Private student loans can be consolidated with other debt in some case – for example by rolling them into a home equity loan (see below).