Student loan consolidation: How to get out of student loan debt

If you’re facing problems in repaying your student loans, then student loan consolidation may be the suitable option for you. This gives you the freedom to make just one monthly payment, which helps in simplifying your repayment procedure.

Student loans can be primarily divided into two categories – federal student loans and private student loans. Usually it is not possible to consolidate private student loans and federal loans together as they have different terms and conditions.

Types of student loan consolidation

Student loan consolidation can be done in 2 ways – student loan consolidation program and debt consolidation loan. Though both of them make the repayment structure simpler, debt consolidation loan is a better alternative to loan consolidation program.

1. Student loan consolidation program

There are various debt consolidation companies that help you in getting rid off your debts through proper and effective planning. After you enroll yourself in a loan consolidation program, the company starts working on a plan, as per your financial condition. They try to negotiate with the creditors to reduce the interest rates, and decide on a monthly payment that you need to pay towards your student loan debts. All you need to do is just make the approved monthly payment to the company. The company will make the necessary payments to the creditors on your behalf.

Eligibility criteria for the consolidation program

In order to enroll in a consolidation program, you need to satisfy certain factors, which are given below.

1) You are in repayment status of student loans.

2) You are no longer enrolled more than half time in school.

Benefits of a loan consolidation program

Student loan consolidation program offers you a number of benefits, as stated below.

• You will not get any more harassing calls from your creditors.
• Your company will negotiate with your creditors to reduce the interest rates.
• Your repayment terms will be simple.
• There will be no adverse effect on your credit score.

2. Student Debt consolidation loan

Debt consolidation loan is actually a personal loan, which you may take from a lender or a financial institution in order to pay off your student loans. It helps you in combining all your debts and replacing them with a single loan.

Eligibility Criteria for a debt consolidation loan

In order to get a debt consolidation loan, you need to satisfy certain factors, which are given below.

1) You should have multiple student loans from different lenders.

2) You should have good credit.

3) You are experiencing problems in staying current on payments.

Benefits of a consolidation loan

There are numerous benefits of consolidating all your student loans into one personal loan. The advantages are summed up in the following lines.

• You can enjoy extended repayment term along with reduced monthly payments.
• You can combine several monthly payments into one single payment.

Some of the lenders who offer federal student loans allow for forbearance and deferment when you can’t repay such loans. However, you can take the help of student loan consolidation to enjoy a number of benefits in your federal as well as your private student loan repayments.