Student Debt Loan Consolidation: Is It Right For You?
Are you struggling to pay student loans? If so, you are not alone. Student loan debt is quickly becoming one of the biggest debt problems in America. In 2017, the total federal and private student loan debt totals reached $1.4 trillion.
Approximately 44.2 million people in America have outstanding student loans, and the number of new loans is increasing each day. Sixty-eight percent of the 2015 bachelor’s degree graduates left school with student loans. That year, the average student loan for both public and private nonprofit colleges totaled $30,100 for bachelor’s degree graduates.
It is clear that student loan debt is not going away. Because laws prevent individuals from discharging most student loans in bankruptcy, there is no affordable solution for those who cannot afford to make their student loan payments. Many people go into default because they cannot afford to pay their living expenses and other bills in addition to making student loan payments. Some individuals turn to student debt loan consolidation to try to solve the burden of student loan debt.
What is a Student Debt Loan Consolidation?
A student debt loan consolidation is only available for federal student loans. It combines one or more loan accounts into a single loan with one monthly payment. You are eligible to consolidate your federal student loans once you graduate, drop below half-time enrollment, or leave school.
You must also consider all the pros and cons of a student loan debt consolidation before you begin the consolidation process.
Advantages of Student Debt Loan Consolidation
There are a few pros to consolidating your federal student loans. You may be able to lock in a lower interest rate when you consolidate your loans. A lower interest rate reduces the amount of money you must pay back to the lender for your student loans.
Furthermore, if you are in default on any of your student loans, consolidating your loans may be a way for you to get out of default. By consolidating your loans, you may also have a lower monthly payment.
Disadvantages of Consolidating Federal Student Loans
Of course, there are also disadvantages of consolidating student loans. The main disadvantage is that consolidating loans does not provide any financial relief if you are unable to pay your student loan payments. Consolidating loans does not get rid of student loan debt—it simply combines the loans into one loan with the same amount of debt.
In addition, you could end up with a higher interest rate on the consolidated loan, especially if you have several loans with different interest rates. Lastly, consolidating loans extends the repayment period for your student loan debt. You may be lowering your monthly payment, but the amount you pay over the term of the loan is much more than if you do not consolidate your loans.
Deciding if Consolidation is Right for You
Student loan options can be very confusing. There are many options for repaying your student loans, including several repayment options that may be better for you than a consolidation loan. Before choosing to consolidate your student loans, research various payment options to determine what option is best for you now and in the future.
The Chris Wesner Law Firm Wants to Help
The Chris Wesner Law Firm understands the struggle many people face when trying to settle student loan debt. Our law firm has developed The Fight on Student Loan Debt campaign to provide information, support, and legal advice to individuals who are struggling to pay student loan debt. In addition to information about paying back student loans, you can also find information about how to discharge student loans in bankruptcy on our website.
For more information and a free consultation with an Ohio bankruptcy attorney, contact The Chris Wesner Law Office, LLC by calling (937) 339-8001 or by using the contact form on our website.
We want to help you find an affordable way to handle your student loan debt that does not result in undue financial hardship that can potentially cause you to lose what you have worked so hard to gain.