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Student Loan Shock

It is easy to forget about the amount of debt accumulating from student loans while you are in college, studying hard, and enjoying the college life. At some point, however, you graduate, and then the shock of how much you actually owe hits. You discover that every institution through which you received student loans now wants to begin the re-payment process, and you are going to be responsible for monthly payments. Even though the interest rate is attractive, the payments are going to put a hole in your earnings as a new graduate. If you do not qualify for a deferment, these payments will begin pretty quickly, thus, the shock of student loan!

Your Options

Certainly, if you are unable to make the monthly payments as designated by the lending institutions, you can complete the form for deferment based upon inability to pay. Proving this, however, can be a bit tricky, especially if you are now employed in your field.

If you have accumulated other debt in addition to the student loans, moreover, you may be quickly reaching the point of juggling payments and facing the worry and penalties of late payments to some or all of your creditors. All of this will affect your credit score in negative ways, and then you will have problems with larger purchases, such as cars and homes. You don’t want to get into this downward spiral at all, so you may want to consider a debt consolidation loan for all of your debt.

Consolidation Loan Remedy

A debt consolidation loan will be negotiated between you and a lender, usually a bank or finance company. Sometimes, credit card companies will offer these outside the realm of the card itself. At this point, you may want to consider putting your student loans into the consolidation loan, as a means of simplifying your overall debt picture and getting one lower payment which you feel you can afford. Your debt will all be paid off by this consolidation loan, and you will make one monthly payment to the new lender.

At first, this looks like a good option for those who are in over their heads. And it may in fact be the answer for you. But you must also consider the important fact that the interest rate charged on debt consolidation loans can be high, much higher than the original interest rate charged on the student loans. Because the rate is higher, it will take you longer to pay off the loans, and you will have paid much more in the long run than you will pay by keeping the original loans. The important things to consider are as follows: Will the debt consolidation allow you to maintain a good credit score by making one payment and making it on time every month? If the answer to this is yes, then you should consider it. Are you willing to pay more for your student loans than you originally planned in order to keep a good credit rating? If the answer is yes, then you should do it. Are the prospects for upward financial movement in your career good? If so, a consolidation loan now may be the answer, because as your income increases, you will be able to double up on payments and actually pay the loan off more quickly.