| Student Loan Consolidation Programs (debt consolidation)
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Student Loan Consolidation Programs
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Difference between debt negotiation and debt management
Debt negotiation and debt management/consolidation both help consumers pay off their debts through two different approaches. Each affects your credit score, payoff period, and taxes differently. Before choosing either options, be sure you understand the long term consequences of each debt management option. Influence On Credit Score Debt consolidation is better of the two wh... Read debt consolidation article
How to consolidate credit card debt
Spending is such a hard habit to break, especially when people use their credit cards. Once they get addicted, they continuously endure the agony of spending in spite of imminent problems that tag behind. And when things eventually get out of hand, most people will soon realize that they are already stuck with a mountain load of credit card debts. And mornings after mornings, they will ... Read debt consolidation article
Student Loan Consolidation Programs
Keeping in mind that the cost of college education is much higher than it used to be, by the time you graduate from high school you already need to consider applying for one or several student loans. Fortunately, taking up several student loans is not complicated as there is a student loan consolidation program available to you that will roll all your existing loans into a single one.
The federal government, in its efforts to provide accessible and affordable education for all, has set low and fixed interest rates on all federal student loans and is also offering a student loan consolidation program with flexible repayment schedule and reduced interest rates. All the advantages of loan consolidation are available to you: you make a single payment every month instead of the several payments you initially had, the amount of money you pay is lower than the sum of amounts you had on your previous loans and there is only one lender that you make the payment to. Also, applying for a student loan consolidation program is an easy process that does not involve any credit checks and does not require you to pay any additional fees or charges.
Advantages and disadvantages of a student loan consolidation program
With the student loan consolidation program you get all the advantages that come with rolling several different loans into one. The interest rate is lower than the average of your previous interest rates, which means you can actually save money while you are repaying the loan, and it is not subject to change for the duration of your repayment schedule. The repayment plan is flexible, you can extend the period you need to pay back the loan, or you can choose to pay the entire sum earlier with no additional prepayment penalties. There is also the option of making the payments online which decreases the rate of interest by 0.25% and also keeps you constantly up to date with the details of your repayment status.
There are, however, a few disadvantages. For instance, before applying for a student loan consolidation program you need to do the math of your existing loans properly. If some of your loans have extremely low rates of interest it is not advisable to consolidate them because after they are averaged with the interest rates of your other loans the rate will increase and you will end up paying more money. In this situation it is better to pay your low interest loans separately and only consolidate your other student loans. Also, always keep in mind the repayment schedule flexibility offered by the student loan consolidation program.
You can stretch the payments to a period of 30 years, but it is advisable that you prepay the loan if such an opportunity arises. This will save you the interest added in time, therefore meaning that the amount you prepay is much lower than the overall sum you would pay in 30 years. The student loan consolidation program is an effective tool in simplifying your repayment schedules and lowering your interest rates.
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Settle Your Debt
If you find yourself in heavy debt and are considering bankruptcy, you should look into debt settlement. Debt settlement is where you contact your creditors and explain your situation. You make them an offer to settle your debt for a lower amount than what you actually owe.
Why would a company be willing to take a smaller amount than what you owe them? They know that if you go into bankruptcy it is unlikely that they will see any money from you. If you owe $5000 with an additional $2000 in late fees, they may be very happy to get $3500 from you. They have lost money, but $3,500 is much better than 0.
When you do debt settlement it can still make a negative impact on your credit rating. After all anytime you don't pay money that you owe it doesn't look good. In some situations you may be able to negotiate pieces of the debt settlement that will keep your credit score looking good or at least not as bad as it would be if you went bankrupt.
If you are in trouble and are looking at debt settlement, you have two options. First you can do the debt settlement yourself by contacting all of your creditors. Second, you can hire a company to do it for you. If you want to do the debt settlement yourself, you should contact all of your creditors and be honest with them. Let them know you are in trouble and are doing everything possible to get them their money. Then you should probably follow up with a settlement offer letter. Check with your library for examples of these letters. Basically you make them an offer saying that you will pay them X amount instead of the amount that was originally owed.
If you are looking for a settlement company, watch out for people who are just trying to take advantage of you. There are even some debt consolidation companies that get you on a payment plan and then do debt settlement behind your back with your creditors. So if you owe a total of $50,000, they will give you a loan for $50,000 and get you on a payment plan for the next 20 years. They will then contact your creditors and tell them that you can't pay and try to offer them $10,000 instead of the $50,000. This can really hurt your credit score--especially because you have to pay the full amount anyway.
Debt settlement should be a last resort and you should view it as a way to get people some of the money you owe instead of losing it all in bankruptcy. You should make every effort to repay any loans that you have taken. You have given your word to repay them. Debt settlement is a good option when there is no other way out.
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Student Loan Consolidation Programs
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