Student Loan Debt Consolidation

Written by Mark Sanfilippo
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For many graduating students, entering the workforce with an undue amount of debt is a daunting prospect to say the least. This is unfortunately the situation that many college graduates face, however, and finding a good way to work off that debt can be challenging at best. There are fortunately some viable ways that you can ease the burden of student debt.

One of the most widespread methods for reducing and working off student debt is through student loan consolidation. Chances are, most people have heard at least something about student loan consolidation, but many don't understand exactly what this service entails. Luckily, consolidation is not that difficult or complex of a process.

Consolidation is essentially a process whereby all of your various student loans are combined into one large loan. You then make one payment towards this grand total loan. At first this may not seem like that great of a deal, but once you look at the numbers, you'll notice that it's a very good deal indeed.

Consolidation Will Lower Your Interest Rate

The absolute best advantage of consolidation is the chance to lock in a lower interest rate then what your various loans are already set at. This is somewhat akin to refinancing a home in order to lower a mortgage payment. When you consolidate you get the opportunity to have your new lump sum loan set at the current interest rate, which is currently at the lowest it's been in 37 years.

Lowering your interest rate can save you thousands of dollars in the long run, and some loan consolidation companies offer additional ways to lower your interest rate even further. Some offer rate reductions for students who consolidate their loans while they are in their grace period. Be aware that a loan company that offers this service but then tells you that your grace period is void, i.e. you have to start payment immediately, is probably not the best loan consolidation company out there. In other words, keep looking.

In addition to the early consolidation rate reduction incentive, some loan consolidation companies offer additional rate reductions. Some offer one or even two point reductions for payments that are made on time. For example, the company might have a policy whereby if you make all of your payments on time for two years, they'll reduce your rate by one percent. One percent may not sound like a lot, but in the course of a 20 year payback schedule, it can make a significant difference.

Streamlining Your Monthly Bills

In addition to saving you money, student loan consolidation also saves you time and effort. Instead of having a couple or even several separate student loan payments, you'll simply have one payment to make every month. Some consolidation companies even allow you to have your loan payment deducted directly from your bank account. Many of the better loan consolidation companies will give you a little interest rate reduction for paying your loan this way.

Once you determine that loan consolidation is a good option for your situation, you just have to decide which loan consolidation company to go with. One excellent way to make this decision is to simply call a few companies up. Arm yourself with a list of questions and speak with a representative. The better companies will be happy to answer your questions and concerns, and they won't rush you to make a decision.

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