After graduating college, most of us have piled up a considerable amount of debt. Some of us were lucky to have parents who could cover the costs of college education. Most of us, however, were not so fortunate. Pulling out loans definitely seems harmless enough, but 4 years of college (and even more if you’re a super senior or decide to go to grad school afterwards) is a hefty amount of money to pay back.
One option that is available to postgraduates everywhere is that of debt consolidation. Debt consolidation, for those who do not know, is the act of pulling out one large loan to cover all your school loans. That way, your debt is centralized (consolidated) into one easier to manage payment. If you’re like me, you pulled out multiple loans from multiple different sources. You have school loans, Sallie Mae loans, Bank of America loans, Private Loans—sometimes it’s very difficult to remember how many people you have to pay back! Here are 5 reasons why Debt Consolidation may be a good choice for you.
- Debt Consolidation makes loans easier to manage. Instead of having to track down 5 different loan payments, debt consolidation provides one simple payment that you can take care of more easily. If you have debt from multiple sources, it’s hard to remember to pay them all back sometimes. Debt consolidation helps ensure you don’t forget to pay back your loan.
- Debt Consolidation ensures smaller payments. Because you are paying back only one loan and not five loans, you can arrange for smaller payments through consolidation. This is not always necessarily a good thing, because it will take you longer to pay off your loan. However, immediately after you graduate you usually make less money than you will be making in the future (in theory). Consolidating your debts can save you up to 54% a month in how much you have to pay back.
- Debt Consolidation may provide a lower fixed interest rate than your current loans. This could potentially save you thousands of dollars in paying back money. Interest sucks—minimizing how much you have to pay back in interest is definitely something worth considering. You should compare the interest rates and see if debt consolidation makes sense for you.
- Debt Consolidation provides flexibility in paying back loans. There are tons of different ways that you can go about paying back your debt. You can extend the payment plan, shorten it, pay it all back at once—debt consolidation gives you a lot of flexibility in deciding how much time you want to take to pay off your debt. Remember, however, the longer you take to pay off your loans, the more interest you will have to pay in the end.
- Debt Consolidation is easy to obtain. Basically every student is eligible for consolidation. There are no prepayment fees, no credit checks, and no co-signers required. The site www.loanconsolidation.ed.gov is a government site that will help students easily consolidate their debt.
The average amount of money that a student has to pay back after graduating college has risen significantly in the past year. If you have loads of debt, and are having a hard time managing it once you graduate, you should seriously consider consolidating your debt. I have personally consolidated mine, and am very happy that I did so.
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