And stay out of the high interest debt cycle!
Students with a huge amount of debt on their student loans are desperately looking for ways in which they can stay out of the debt cycle and also protect their credit score. With the rise in the educational cost and the tuition fees, not many students and parents are being able to make ends meet with the rise in the debt obligations within the nation. Not all student loans can be consolidated and therefore if you’re lucky enough to have taken out federal loans, you can consolidate them through the federal debt consolidation loan. Here are the benefits that you may reap when you consolidate debt through direct debt consolidation loan.
· Single lender and single payment in a month: Instead of having to make timely payments to the multiple lenders and splitting your payments among multiple people, you just have to make a single monthly payment towards the US Department of Education. You just have to write a single check to the lender and this will be disbursed off to make timely payments to your creditors.
· Revised interest rate: The high interest rates are often the biggest reason behind inability to make timely payments and therefore you can benefit when you have a debt consolidation loan as the interest rates will be revised. The rate on the new loan will be drastically lower than what you were paying on your student loan and therefore you can easily save money through such a loan.
· The repayment term will be extended: The repayment term of the debt consolidation loan will also be extended throughout a long period of time and this will again reduce the monthly payments. Your monthly income will be assessed; your total debt obligations that you make in a month will also be taken into account before deciding the repayment term of the loan. You just have to make the timely payments throughout the term of the loan.
· Flexible payment plans: As the students live on a fixed monthly income, the debt consolidation loan will give them an option to repay the entire amount in easy and affordable monthly payments. The most common repayment plans are Income Based Repayment Plan and Income Contingent Repayment Plan. You can even switch from one payment plan to another based on your present financial needs.
· Boosts your credit score: You can easily boost your credit score by making timely payments through the debt consolidation loan. However, ensure that your payments are reported to the credit bureaus on time so that they don’t hurt your credit score.
So, when you’re wondering about the possibilities of getting out of student loan debt, you might consider student loan consolidation. Don’t forget to devise a financial plan even while getting out of debt through a plan as this will help you successfully complete the entire process.
This article contributed by:
Andrew Jackson is a financial writer who has profound knowledge on the contemporary financial world. He loves to contribute his articles to various financial communities, websites and blogs so that people who are going through distress, can read and help themselves get out of the debt mess.