Student Loan and Debt Consolidation Tips

Student Loan and Debt Consolidation Tips

by Jon Arnold

It happens. You get yourself into a seemingly overwhelming load of debt, whether it is from credit cards, from personal financial setbacks, or even from things that you have no direct control over like a job layoff, huge medical expenses, a messy divorce, etc.

And rarely does a student graduate from college these days without a massive amount of student loan bills that now need to be paid back. The good news about student loans is that they are usually at a very reasonable interest rate, but when the student is out looking for a job, finding a place to live, and managing all the other aspects of their life, having that student loan bill looming over their head can cause a lot of stress.

By far, in either situation above, the best and easiest way to get this taken care of is through a debt consolidation loan or a student loan consolidation loan. At its core, what you are really doing is refinancing the debt that you owe. Do not get debt consolidation confused with bankruptcy because they are two entirely different approaches. Bankruptcy should be considered only as your very last resort, since declaring bankruptcy is much more serious than doing so in the game of Monopoly, and it will leave a glaring red flag on your credit report for the next 7 to 10 years.

One big advantage to debt consolidation or student loan consolidation is that it takes a lot of the stress away. Instead of having to pay umpteen different bills each month, you only make ONE payment to the debt consolidation service. With this type of loan, they do not give you a cash loan to do with what you please, but rather they arrange to make your payments for you to each of your creditors or student loan issuers, and as long as you make your monthly payment on time to the debt consolidation company, your bills to your creditors are being taken care of.

Another advantage to this approach is that the monthly amount you spend to make your payments is typically quite a bit lower than what it was before. This gives you some additional financial breathing room to get your financial affairs in order. It also keeps your credit history clean with the credit bureaus, since from their perspective, you are making your payments to them on time every month, which is the absolute best thing you can do to keep your credit score as high as possible.

You need to realize that with a debt consolidation loan or student bill consolidation loan, your debt has not gone away. You still have those financial obligations, so don't think that you can now go on a spending spree. It might even take longer to get the entire debt paid back, but now the stress of stretching your personal budget to the breaking point is no longer there, and you can many times "pay ahead" when your financial situation is better so that the outstanding loans don't take so long to be paid back.

Consider debt consolidation to get those bills taken care of. The future is bright and this can give you the time you need to get your financial situation straightened out without doing serious damage to your credit report and credit score.