Consolidating Loans
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Graduating from college is a big accomplishment. But, so is paying your student loans afterwards. If you have entered the real world not only having to adjust to living on your own and working, but paying huge monthly payments, you are not alone. Millions of graduates start "real life" without monthly budgets, any way to manage their bills, and all of their student loans scattered, a huge burden to take on alone.
Fortunately, there are some great ways to wrap up your student loans into one package that you can deal with, and some psychological tricks for making them smaller, as well.
The first step in this process is to take account of all your expenses and bills and figure out what you actually owe on your student loans. The best way to do this is before you leave college and you lose access to things like the registrar and the bursar, who really track all of your finances at school. Ask them for paperwork, or even better, web access to your loan amounts and conditions. It is important to note not only the payment amounts and dates, but rates as well. Many student loans charge more percentages later on, so it is in your best interest to begin paying earlier.
There are two ways you can go from here. The first is completely eliminating your student loans by joining a government organization, such as the Peace Corps, for example. However, this is a drastic step and one that needs to be considered carefully. The second is paying them off monthly, possibly through consolidation.
Usually, your loan must be over $7,500 in order to be consolidated with other loans, and it has to be consolidated within a certain amount of time after graduation. This means that you will group all your loans into one. Usually, there are services that can conduct this for you, but make sure you are careful with who exactly completes the consolidation, and that you are not charged extra.
If you consolidate your loans, your rate usually does not go up. As with all the rest of your bills, make sure that you have enough room in your monthly budget and your bill management system to be able to make payments on time. Otherwise, the interest accrues very quickly.
When choosing a lender or company with which you want to consolidate your loans, check for features like the website interface, the interest rate, and possible discounts you could get for good behavior and on-time payments. Some great websites to check out when consolidating include http://www.finaid.org/loans/choosing.phtml, which outlines different types of federal loans and the options you have for paying them back.
One thing that you should not do, no matter how dire your situation, is declare bankruptcy, especially this early in your career. It will have a negative impact on your credit history later on, when you are looking to buy a car or a house. When consolidating or just dealing with your loans, make sure you get the most information possible from the most sources possible so you don’t feel underinformed and overwhelmed. You have enough to worry about, new grad!