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Student Loan Consolidation: Lowering the Cost of Education

Making it through college is a tremendous accomplishment that any student can be proud of. A degree may add to the marketability of skills needed in the job market, but your credit takes a beating in the process due to student loans. Yet, without loans many people could not afford college. Student Loan consolidation programs can help control and manage the resultant debts and rebuild credit. Special programs are available that will decrease monthly payments and interest rates, and improve credit scores.

How can you benefit from a student loan consolidation program?

A student loan consolidation program combines loan debts and allows the graduate to make one monthly payment instead of several separate payments. In most cases, this reduces monthly debt by up to 50 percent or more. The amount of the total loans and specific consolidation program will dictate your precise savings.

In addition to the benefit of one payment, most loans qualify for lower interest rates and help improve your credit score since loans, once consolidated, reflect a paid in full status with credit reporting bureaus that are used determine approval for other types of loans and financing. This status increases your credit rating while you benefit from the lower payments.

Will loans which are in default qualify for consolidation?

Some consolidation programs do not accept loans in default status. Other programs are designed to address default loans, associated interest rates and payment plans. These special programs may require participation in a credit counseling program designed to guide you towards making better financial decisions while rebuilding credit.

Money management is not something most people want to do, but credit counseling may benefit you, especially when considering defaulted loans that will be paid off. The hassle of harassing mail and phone calls from creditors will be eliminated. This will help you while working with a consolidation counselor to repair your credit history to a positive report.

Federally - backed Consolidation Programs

Even student loans that were issued by the government (as opposed to a bank) are eligible for federally backed consolidation programs. You probably already know that most government loans have a lower interest rate and they are usually easier to get than conventional loans, so it's good news all around.

Consolidating all of your student loans and combining them into one loan will usually qualify the loan for lower interest rates due to financing a larger amount of debt. The life of the loan may be extended (meaning that it will take longer to pay it back), but the benefit is paying less money out of pocket every month. New college graduates may not make the greatest salaries right out of school, and spending less money while trying to get a foothold in the job market can make the transition easier and more affordable.

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