Get Out of Financial Aid Debt Faster
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Do you need to apply for a student loan to pursue your college degree?
Financial aid debt in the form of multiple student loans can cause trouble for any recent college graduate due to having more than one loan brings more than one interest rate and monthly payments. A combination of multiple interest and multiple payments can make debt burdensome and could lead to missed payments, which may hurt a recent graduate’s credit score, so student loan consolidation may be worth considering.
Typically, consolidating student loans, when there are multiple loans from various lenders, for instance, is going to make things easier when it comes to repayment, but there are some things to consider and it might take some work to figure out your best options.
When you consolidate you get a larger sum with a lower interest, but interest on a large sum of debt, even if it is low, may cost more in the long run, so you need to look at the number of loans and interest rates you have and figure out the timeframe for repaying those separate loans, then look at what would be the total cost if you consolidate.
The lower interest is what most people look at, but the length of the repayment period is what can cause the problems. Realize that if you do consolidate, you don’t have to pay the minimal monthly payment, but rather you can pay more and get out of debt faster while working with a low interest rate.
Research and talk to consolidation companies and be certain there are no fees associated with paying early or paying more each month. There are some great organizations that will help with student aid debt, but be sure consolidation is the right thing for you before taking that route.
By Karen Byrd