Consolidation Loans For Student Loan Debt Repayment Assistance And Lower Monthly Payments

Students who have outstanding college loan debt obligations from multiple sources have found that consolidating these loans can provide more affordability in terms of the costs associated with monthly mortgage payments. These repayment assistance options through consolidation plans are available, typically, through either a private student loan consolidation plan or a federal consolidation loan, both of which may offer the lower costs a student needs to avoid missing payments or defaulting on their debt.

Private student loans are unable to be consolidated with federal student loans under a federal student loan consolidation plan, but students who may have a mixture of these debts may also have options through a private student debt consolidation loan. Many graduates look to federal student loan consolidation options because they can offer lower interest rates, but if a student is in a position where they are simply unable to meet multiple student loan debt repayments, these consolidation plans have allowed for students to erase these multiple obligations and simply group all of their student loan debt within one personal loan commitment.

Obviously, students who only have to meet one payment on their student loan debts may find this opportunity is more affordable, but even students who have consolidated their loans have been able to participate in a program that allows for even lower costs to be met on their repayment obligation. As an example, students who consolidate their loans under a federal student loan consolidation plan may also qualify for programs that will require them to only pay a small percentage of their monthly income towards repaying the debt.

There have been many concerns over the past months as rates of default on student loans are reportedly rising due to the fact that some students are either unable to repay their student loan debts due to factors like unemployment or underemployment, or some may simply be unwilling to honor this debt because of the high costs may be associated with their personal student loan debt situation. Yet, private student loan consolidation plans or consolidation loans from Direct Loans, the federal student loan servicer, have been able to make the burden of repaying these college loans less severe so that students will not do damage to their credit score by missing payments or simply giving up on repaying these loans.

While student loan consolidation plans have helped some, financial advisers counsel students to weigh all of their options and be sure that a repayment plan cannot be formulated to help them erase their debts separately, as consolidation loans have usually been associated with higher overall costs. While some of these consolidation plans may offer a low-interest rate, it could take longer to repay a debt consolidation loan and, as a result, students may meet higher costs if only minimum monthly payments are made. This has been of little concern to some, as simply avoiding missed payments is their main goal, but for students who may be in a decent financial position, weighing all of one's student loan debt repayment options will be necessary to find the most affordable and cost efficient repayment option.

If you’re battling student loan debt, there is help available

As a financial counselor specializing in student loan debt since 2008, April Sanderson of Lutheran Social Service said that as the economy has worsened, the number of people she's helped with student loan problems has increased.

But it's not just the economy that's caused that rise, Sanderson said; it's also the increase in tuition and college expenses.

"Students are having to take out more loans, usually having to max out their federal loans and having to take out private loans in addition to using credit cards," she said. "Once that all comes due, they're often not in a position to afford the payments."

Sanderson said there is help for people with high student loan debt, depending on the type of loan you have. If it's a private loan, then borrowers are at the mercy of the lender.

"There's no regulation; they don't have set standards," she said. "There's no guarantee that they can or will help."

But federal or state loans often can be deferred with proof of financial hardship, Sanderson said, while some programs offer forgiveness if the borrower works in community service.

If borrowers are considering consolidation, Sanderson warns not to combine private with federal and state loans.

"If you do that, they all become private," she said.

She also recommends reading the fine print before you sign any loan consolidation papers to make sure you understand the interest rates.

But above all, she said, don't ignore your loans, because they won't go away.

"Always talk to your lender and see what options you have," she said. "Even if it's a private lender, there may be something they're willing to do."

Paying right debt will fix credit faster

Dear Debt Adviser,
Due to some horrible credit card habits in college, I racked up $26,000 in credit card debts. I realized the error of my ways several years ago, and managed to whittle it down to $9,000 currently. However, one account went into collections, then disappeared for many months, and was bought and sold by several different law firm-fronted collection companies. Finally, one that was in my state filed a suit. I entered into a consent to judgment, agreeing to pay a monthly amount I could handle. It then showed up on my credit report as a public record. I recently came into $5,000 (legally), and want to know if I should pay off the collection agency with the judgment, or pay off two, smaller-balanced credit card accounts that still exist?
-- Greg

Dear Greg,
Shaving $17,000 of high-interest debt is more than just whittling, although at times I'll bet it seemed like you were attacking an oak tree with a penknife. With around $4,000 of debt left after your next big pay-down, I'm less concerned about the relative cost of your remaining collection account versus your other credit card debt than I am with rebuilding your credit to get you back into the prime credit pool.

As a young and gainfully employed person, you will likely need access to credit sooner rather than later for life's good stuff like vehicles, a home, an engagement ring, etc. My objective is to get your credit to be in the best shape possible as quickly as possible so you can enjoy all that life has to offer. And to do that, chances are you'll be applying for a loan, a new job or new credit at some point.

With this in mind, I recommend that you pay off your judgment. Although paying it off will in no way eliminate the public record from your credit report, a paid judgment is much better in the eyes of anyone reviewing your credit report, whether it be for a loan, job, promotion or insurance, than an unpaid judgment. Additionally, once the judgment is paid in full, it will begin to age and count for less in your credit score as you put some time between it and your last payment. Then, by adding positive information to your credit report from your remaining credit cards by making on-time payments, your credit should begin to show real improvement.

My guess is that within two years, the judgment should have very little effect on what you will be charged for credit. During those two years, just be sure you make all other creditor payments on time and as agreed. Current positive information will outweigh older negative information.

There is another thing I recommend you do to ensure that this doesn't happen again. That is to take at least half -- if not more -- of the remaining money from your windfall and stash it away as part of your emergency fund. Without adequate savings, you will constantly be in jeopardy from life's setbacks and less able to take advantage of its opportunities. What you do with the residual of your $5,000 is up to you. My advice is just to make sure it's memorable as this sort of good news doesn't come around every day.

Keep making payments on the two smaller credit card accounts and before you know it, you will have paid your balances and your dues from a hard lesson in what happens when using credit cards to extend your income.

Read more: Focus paying debts that most affect credit http://www.bankrate.com/finance/debt/paying-right-debt-will-fix-credit-faster.aspx#ixzz1DLeLyM13

Student Loan Consolidation

Student loan consolidation is a practical repayment tool that combines your student loans into one master loan, significantly reducing your monthly payment (up to 50% in some cases!). Take a look at how much you can save each month with our student loan consolidation calculator.

Federal Loan Consolidation

Consolidating your federal student loanscan reduce your monthly payment. You can e-Sign your application online and be finished in minutes.

Private Loan Consolidation

Some private student loan program offers interest rate reductions for on-time and automatic payments and there are no pre-payment penalties.

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How much can you save each month?

If you consolidate student loans right now, you could save hundreds of dollars a month. Here's a quick chart showing how much you could save on your monthly payments:

Total Loans	Current Payment	After Consolidation	Monthly Savings
$30,000.00	$345.24	$229.00	$116.24!
$40,000.00	$460.32	$277.63	$182.69!
$50,000.00	$575.40	$347.04	$228.37!
$75,000.00	$863.10	$488.94	$374.16!
$100,000.00	$1,150.80	$651.93	$498.88!
Consolidate Your Student Loans!

Savings shown are based on the current Stafford Loan interest rate of 6.8%; borrowers in grace periods, with student loans other than Stafford (i.e. PLUS or Perkins loans), or with Stafford Loans older than July 1, 1998, will have different interest rates.

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STEVEN VAN METRE: Relief for painful holiday debt 'hangover'

Talk about "hung over." But I am not talking about the after effects of too much booze and too much partying. I'm talking about too much spending; too much flexing the credit card plastic over the holidays.

I have been working with a man we'll call Joe for the past several months. We first met when he enrolled in a "preparing for retirement" course I taught. Somewhere in his mid 50s, it dawned on Joe that he was spending too much and saving too little. By the time he reached retirement age -- at Joe's savings rate, that would be around 100 years old -- he would still not have enough money to stop working.

Joe is a college graduate. He has worked for the same local company for 20 years. He earns a good living that supports a wife and two college-bound kids. But he likes to spend -- on a big house, boat, dinners out, nice vacations, etc. You get the picture.

But the reality of his age rubbing against his bills finally caught Joe's attention, leading him to my office, where he pledged to cut his spending and bring discipline to his family's budget.

All seemed good, until the holidays hit and Joe made his financial hole deeper and his road to retirement rougher. Like millions of other Americans, Joe spent too much in December and is facing a mountain of bills in January.

What can I do? The question was written all over his face as he and his "holiday debt hangover" paid me a visit, just two weeks after the fizz had gone flat on his New Year's Eve champagne.

The first priority was to address Joe's debt, while still moving him forward on his retirement planning. Becoming debt-free provides the most secure retirement.

Develop a budget: Before you can save money, you need to know how you are spending it. I told Joe to sit down with his wife and children. Itemize expenses. Discuss ways to cut costs. For example, Joe's family pays monthly bills for both land-line telephone service and cell phones. But the land-line is seldom used. Disconnect the land-line. Joe and his wife seldom used their cell phones to access the Internet. Drop Internet service. These two moves saved about $100 a month.

Brace yourself: Gather all of your credit card statements. Add them up. How big was your plastic "meltdown?" How deep is your credit card debt hole?

Stop using your credit cards: Before Joe's financial problems can get better, he must stop making it worse. I told him to quit using his credit cards. If he used them at all, reserve them for emergencies.

Loan consolidation: In some cases, bringing your debt into one big loan can be beneficial. But there are risks. Often interest rates can be high on these loans. Miss one payment and your credit rating can take a huge hit. Go cautiously if you seek a loan consolidation.

Debt settlement: Companies offer to negotiate "settlements" with creditors on the amount consumers owe. Again, be cautious. Consumers often pay high fees to these companies and receive little or no debt relief. While laws have been tightened to prevent fraud, time will tell if abuses will be curtailed.

Seek your own relief: Ask for a rate reduction on the credit cards you use that have the highest interest rates. If you have been a long-time customer and indicate you may be switching your business to a competitor, your credit card provider may be willing to reduce your interest rate.

Pay off smallest balances first: The temptation may be to pay off the big bill -- the credit card with the biggest balance owed. But I told Joe to pay off his credit cards with the lowest balances first. Most of us like "instant gratification." Nothing is more gratifying than seeing a debt put to rest. Then apply the payment to retire the other outstanding debts.

Tax refund: According to the IRS, the average 2009 tax refund was more than $3,000. Apply your refund to your credit card balance.

Pay cash: I told Joe to pay for his purchases with cash. When spending involves using physical currency, you spend less. Don't believe just me. In 2009, The Journal of Experimental Psychology reported the findings of a scientific study that concluded using cash discourages spending, while using credit or gift cards actually encourages it. According to the study's authors, Priya Raghubir and Joydeep Srivastava, the more transparent the payment outflow, the greater the aversion to spending, or higher the "pain of paying."

Joe's "holiday hangover" will not disappear instantly. But step by step, he can reduce his debt and prepare for a more financially secure retirement.

-- Steven Van Metre, a Bakersfield financial planner, will be teaching a retirement planning course through the Levan Institute for Lifelong Learning, www.bakersfieldcollege.edu/levaninstitute. Saturday sessions are 9 a.m. to noon Feb. 26 and March 5 and 12 in Bakersfield College's Weill Institute, 2100 Chester Ave. Thursday sessions will be held from 6 to 9 p.m. Feb. 24 and March 3 and 10, at Stockdale High School, 2800 Buena Vista Road, Room 106. These are Van Metre's opinions, not necessarily those of The Californian.

College Loans Are Almost Mandatory With The Cost Of Tuition Rising

Student loan consolidation is a way for borrowers to manage multiple loans with varying interest rates by combining them all into one lump sum with one rate. Borrowers usually decide to consolidate when doing so will result in paying a lower interest rate. However, consolidation does not equal a lower rate; it's possible to consolidate multiple loans into one but end up with a higher rate of interest on the new principal amount.

Tuition Rates Increasing Yearly

With tuition rates increasing every year something needs to be done to help lower the cost of a college education.  If the amount of money it costs to earn a college degree does not start to decrease, higher education institution run the risk of pricing out some students who are unable to get financial aid.  Currently, a large number of students have to turn to federal student loans or private loans to pay for their college education.  Finding new and unique ways to help lower costs is a great way to make college more affordable for everybody.

Credit Unions

However, reports concerning credit union student loan lending has stated that, thus far in the 2010 through 2011 academic year, credit unions have originated $210 million in loans. Credit unions are often seen as affordable and can offer low interest rates, which could be true of certain student loan opportunities, but this again may come down to a borrower's particular credit union and their financial position. Yet, some advisers are suggesting that students who may have parents who are members of a credit union or themselves are a member may want to look at student loan borrowing opportunities from their credit union due to the fact that these loans could be quite affordable, in terms of interest rates, and there are reports that credit unions are also offering assistance plans if trouble arises when it comes to repaying student loan debt after graduation.

Debt Advice, Student Loan Consolidation for 2011

Getting a student loan consolidation after getting out of college can be a good way to temporarily hold back some big payments that are going to be due.  Getting a fixed rate for the duration of the student loan consolidation can give you enough time to secure a job and not have to worry about overwhelming debt.  Debt advice can come easily to most, but the only debt advice you take should be from a finance expert professional.

Student loan consolidation debt advice should be followed if you are already running behind in payments.  It isn't too late to consolidate the amount of debt into one, easier to manage student consolidation loan.

Students that are graduating in this current economy are finding that the market is not only flooded with their types of degrees but also that there is very little growth in jobs at the moment.  While graduating students seek jobs in this weakened job market, they are being bombarded with payments that are due and not being able to pay for them.  A lot of students, especially grad students have more than one student loan. Instead of getting hit with late fees on each one, they could use a student loan consolidation and make easy payments once a month until they can find employment.