If you are a parent sending your child off to college or if you are a student going to college for the first time, you probably cringe whenever you receive a tuition bill in the mail–or when you thinking about buying $1000 worth of textbooks for next semester.
As the price of getting a college education rises in the United States, so does the demand for student loans and student debt consolidation services. Whether it be for graduate school or to study abroad, students are accruing massive debts beyond what was reasonable in the past.
These loans already have low-interest rates and flexible pay-back terms because they are specifically targeted to members of society who are not in the workforce; however, even with these rates, you may find it troublesome to pay them back on schedule.
Becoming eligible for student loan debt consolidation depends on several factors, including the types of loans you have, your credit history, and your current financial situation.
Consolidations programs are tailor-made to help students manage their debt and avoid a debt default. There are two ways in which these programs will deal with the problem: they will either reduce the principle or they will eliminate it altogether.
This is permissible for all loans where they allow payback in terms of specific services or higher education; whether or not this applies to you depends on the student loan scheme you opted for.
If this does not work for you, you always have another option: you can seek the help of a consolidation agency. There are special consolidation agencies that deal with student debt problems.
Basic Types
There are generally two types of student loans: federal and private.
If you have taken both, you should never consider consolidating them into a single package. Only federal loans have government backing; and hence, can be refinanced at low rates. It is always advisable to take all federal loans together, solve them; and head for the private ones. Private student loans are generally unsecured and charge higher interest rates than their federal counterparts.
Conditions of Consolidation
There are certain norms that have to be in effect if you want to consolidate your student loan. To begin with, you have to be out of school or college and must be in the “grace period” of the loan, or must already be making repayments to avail of the facility of a consolidation help service.
If you fit into the criteria, then you should move ahead to the next step, which is talking to the
consolidation company and asking them to contact your creditors to reduce your monthly payments and interest rates. Just as with any other loan, student loan repayment affects your future prospects of loan-taking.
If student loan debt goes beyond eighty-five percent of your total income, it is seen as a negative score in your future credit assessment. This shows that even student loans have an influence on your future decisions as a borrower.
There are some consolidation companies who may qualify you for additional reduction programs, which not only reduce the interest rates, but also include grace period savings, on-time payments, and automated direct-debit payments.
Beware
Not all consolidation companies on the block are genuine, so make sure the one you apply for is a reputed one with sufficient evidence to support its creditability. Otherwise, it will lead to doubling your problems, as fake companies will only add to your already high debts.
Conclusion
To determine if you are eligible for student loan debt consolidation, you should first review your loan documents and credit report to understand the terms of your loans and your current credit standing. Then, you can research different consolidation options and lenders to see if you meet their eligibility requirements.
Some common eligibility requirements for student loan debt consolidation include having a minimum credit score, being current on your loan payments, and having a certain amount of debt. It’s important to carefully consider the terms and fees associated with each consolidation option, as well as any potential benefits or drawbacks.
Ultimately, the best way to determine your eligibility for student loan debt consolidation is to research your options and speak with a financial advisor or lender who can provide personalized guidance based on your individual circumstances.
