The student loan crisis has only gotten worse as jobs have become less available. As a result, many students find that the many student loans they have taken out to pay for their education have piled up. Many students may choose debt consolidation to aide in their repayment. This makes sense since student loans are often the second biggest form of debt that Americans hold after a mortgage. Debt consolidation may be able to help students avoid serious consequences.
The Risk of Default
When you are not able to pay your student loans in time, you risk entering into default. When this occurs, you may find it more difficult to pay off your debts because you will have a more difficult time securing a loan. This is because going into default will negatively affect your credit score. You will lose access to assistance programs that you could apply for if you are still current on your loan. You will not be able to apply for a loan deferment period. Because of the consequences of defaulting on your loan, it's a good idea to seek debt consolidation as soon as possible.
How Debt Consolidation Works for Student Loans
You will likely have several types of student loans. These will include both subsidized and subsidized student loans. When you engage in debt consolidation, your loans will be be under a single account and you will not be paying multiple interest rates.
Obtaining debt consolidation for a student loan can be convenient because you will only have one monthly payment you must make. Therefore, if you struggle to keep track of all your monthly payments, this will be easier to manage with a debt consolidation loan.
You may also be able to extend your loan term. You may only have a few years left on your student loans but may be unable to make your payments. If you only have three years left on your student loans and you manage to secure a five-year loan, your monthly payments will be lower and paying off your debts might seem more manageable. Also, within the span of five years, the economy is more likely to improve and you are more likely to find a job that will help you finish paying off your student loans.
The Role of an Attorney
Before seeking a debt consolidation loan, it is a good idea to speak with a debt consolidation attorney. Then, you can be more informed about whether this is the right decision for you.