Let us start by understanding this notion of ‘college loan consolidation’ by splitting this topic into three principal heads, the good, the bad, and the balance. There is nothing ‘ugly’ here, because in all honesty, many relate debt consolidation to an instant freedom.
Now when you have taken the college loan to pay through your college education, you have actually piled up some debts that hit you only when you are out of college, as the loans are not repayable till you have the diploma/ degree/certificate in your hand.
Now the tricky part is that you are still away from landing that job you want, but you cannot move away from the monthly installments that you have to pay on all the loans availed. This is taking up a lot of your time in keeping track as you certainly do not want to be labeled a ‘payment defaulter’, and this is spilling over to splitting migraines.
So when this going on debts gets really tough, then bundling them up into one student loan refinance certainly seems a practical idea. However, this Student Debt Consolidation Loan is not to be confused with bankruptcy and it will not be a write-off, as you still have to pay this money to the creditor.
Now let us check out the Good Side. The college loan consolidation or student loan consolidation means your entire loans are now one debt repayable to just one creditor through a single payment check each month. No anxiety of making payment schedules and no reminders from creditors on payments due. You even get to pay a lower monthly installment compared to the dues of all the loans combined together that you were paying earlier. This is primarily because you are now paying a lower rate of interest on your new student debt consolidation loan. And yes, you even have an extended date to clear the overall outstanding.
Now let us take a peek into the Bad Side. The student loan has only got a new name and a new creditor, but it is still a debt that has to be paid in full. Your monthly installment may have come down, but you’ll be paying more in the long run because you now have got a lower interest but with an extended time. Besides this, there will also be the usual financial charges levied. The creditor may even seek securing the consolidated loan against some immovable property.
Remember that the new creditor is on a higher risk with your consolidated loans, and with that degree under your belt, you will become the most movable liability for them. The extra money on hand may give you the false euphoria and send you into a spending spree and that would be a real bad idea.
So, what is the Balanced Side? There are no checks and balances here. After all, we did mention that you cannot discount the Student Loan Consolidation as a write-off. The only balance here is that you do your homework prior to availing the student loan and also enquiring about the student debt consolidation loan.
At the appropriate time for each, you should be in position to weigh out the pros and cons. You should be able to source the party that has the best to offer within the limits of your terms. And if you are still on unsure ground, there is the Credit Counseling Service that will help you make the right decision, or we should call it the ‘wise decision’.