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Student Loan Debt - When You’re Buried
Applying for a student loan is an investment in your future. In order to complete your education, you may have to apply for several student loans. Once you graduate, you usually have six months to find a job and begin paying back all your student loans. The average college graduate that owes student loans has accumulated over $19,000 in student loan obligations by the time they are ready to enter the work force. If you went to Law School, you probably owe about $80,000 in student loan debt with a monthly payment of about $1100. If you were fortunate and smart enough to make it through Medical School, your average student loan debt would be about $100,000 with a monthly payment of close to $1500 per month. Even in higher professions, entry level positions do not have the kind of salary that would make payments like this easy.
Student Loan ConsolidationIf the thought of reducing your student debt load is weighing heavy on your mind, there are a couple of options for you. These are student loan refinancing and student loan consolidation. For the first option, there are two ways to reduce your monthly payment by refinancing your student loan. If your monthly payment is too high, then you can reduce your principal by seeking lower interest rates or by stretching your payments out for a longer period of time. You can also refinance with a combination of both strategies. For obvious reasons, getting a lower interest rate is the option of choice. If your credit score is good, attempting to reduce your interest is the best option. If you decide to refinance by simply stretching your payments out longer, you will end up paying more in the long run, but your monthly payment will be cheaper. This option is sometimes the only recourse for those with less than perfect credit. When you choose to consolidate your student loans, the first place you need to check with is a government program called Federal Direct Consolidated Loans (FDCL). You can also check with your present lenders. You must, however, keep your federal loans and your private loans separate, because certain rules apply to federal loans that do not apply to private loans when it comes to interest rates. For example, the federal cap for a government consolidation loan is presently 8.25%. Besides, you can’t consolidate your private loans with your federal loans through a government loan and you wouldn't’want to combine all your loans through a private lender, because your interest will be higher in most cases. Student Loan Research and ResourcesFor your private loans, do your research and comparison shop for the best interest rates and monthly payments. Most lenders require a minimum student loan balance of $5000 to apply for a consolidated loan, however, the FDCL program does not have a minimum balance requirement. Combining loans carries the advantage of having only one creditor to worry about as well as reducing overall interest. This in turn, reduces overall debt and that will help you get out of debt sooner. Federal Direct Consolidation Loans ConsolidateCredit.org |
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