Student Loan Consolidation Hot Topics

Yes – it’s time. You’ve been thinking about this moment on and off since the beginning of summer. In between sipping cheap beer and having a well deserved good time, the thought of paying back your enormous student loan debt is now slowly solidifying into a general state of panic. Soon enough, the bills will start rolling into your mailbox. In between the magazine subscription requests and credit card offers, you’ll find those thick white envelopes packed full with your repayment coupons.

According to the Project on Student Debt, a nonprofit geared to help student borrowers, nearly 75% of borrowers graduating from a 4 year degree program have, on average, $19,000 in student loan debt. This amount does not take into consideration any graduate program debt.

One of the biggest hurdles for recent graduates is adapting to post college life – financially and socially. It’s a difficult time (albeit fun time) compounded by the need to find a good job, the possibility of moving to a new city, the cost of moving, general living expenses that were previously covered while in school, and of course student loan payments.

While many borrowers will be able to make due during this transitional period, either by consolidating or deferring their loans – some borrowers will not be able to pay, and eventually end up delinquent or even in default. Going into default can hurt credit even more then filing for bankruptcy for credit card debt. At a time when establishing good credit and building a sound financial foundation is critical, a mark like that on a credit report can have long term negative effects.

So…what to do now? The debt isn’t going anywhere, so you’ll you just have to get used to it and learn how to manage it.  That’s really the point I am trying to get across – manage your debt, don’t ignore it. There’s a reason why you get 30 consolidation offers in your mailbox each week – consolidation is a helpful tool that can really lower your monthly student loan payments. It’s not THE answer, but simply one of several tools that you can use in order to help free up some extra cash. The same holds true for deferment. While it doesn’t stop interest accrual on some of your loans, it does provide relief if you can’t make your monthly payments.

Stay tuned for more helpful information about dealing with post college life.