I'm a junior in college and have been hearing a lot about debt forgiveness plans and other ways to approach student debt. I have student loans and I am pursuing my degree at a private institution, so I know that I have more student loan debt than my friends who went to in-state schools. One topic I've seen discussed online and in the news is debt consolidation, but I don't quite understand how it works. What exactly is debt consolidation and what should I expect if I want to consolidate my student loans when I graduate?
One of the biggest reasons people may seek out debt consolidation is to get on top of their finances. If you're staring down high interest loans post graduation, it's only natural to want to find a way to set yourself and your finances up for success once you've earned your diploma. Especially if you have many different debts like a car loan, credit cards, and student loans, going through a debt consolidation company really simplifies the process of paying down your debts. Picking a trustworthy company like Solid Ground Financial gives you a path forward towards financial freedom and takes the complexity out of servicing multiple loans with different minimum payments and due dates. Put simply, when your debt is consolidated, all of your debts are purchased by another company who then acts as the sole loan servicer. Instead of paying multiple lenders, you'll just pay the debt consolidation company instead.
Besides offering you a more streamlined way to tackle your debts, debt consolidation also gives you lower interest. This is one of the biggest reasons to consider debt consolidation if you feel like you're drowning just trying to meet your monthly minimum payments. Particularly if you have high interest rate unsecured student loans or credit cards, lowering your interest rate even a few percentage points can save you hundreds if not thousands of dollars over the lifetime of the loan. Federal student loans are often consolidated as a way to secure one single interest rate, as it's not uncommon to have multiple student loans accruing interest at a variety of levels.
Once you've decided to consolidate your debts, the loan consolidation process is very straightforward. You can easily apply online to consolidate your debts, identifying your income, credit score, and how many debts you have and their respective interest rates. After you've turned in your application, you'll speak with a representative to get a customized loan option tailored to your financial situation. During your conversation with the loan officer, it'll be important to ask any questions you might have about the consolidation process. They will be able to help you understand the terms and conditions of your new loan so that you can make an informed decision about your finances. Depending on the amount of debt you are consolidating, you may need to sometimes secure the new loan amount with a home equity line of credit; however, this isn't always the case. You may face other loan origination fees based on your credit history, but even in these kinds of cases, consolidating debt will still ultimately save you money in the long run.
Getting your debt consolidated by a reliable and honest debt consolidation company can be the difference between building a financially-stable future and disaster. Most Americans carry a significant amount of debt with them and live paycheck to paycheck, which can really decrease their ability to build wealth. If you feel like you're caught between a rock and a hard place due to high-interest student loans or a heavy mixture of consumer debt, consider reaching out to a debt consolidation company. They will be able to negotiate a deal that helps you save money and ensures that you can pursue the career you want after you graduate without being fettered down by costly interest rates.