Student Debt Consolidation
As a child, we often have big dreams, some want to become doctors, engineers or take up other professions, which help them achieve their goals. However, if one lacks the required finances for their education, fulfillment of dreams would become a distant truth. In such a situation, student loans help fund our education, which helps achieving our dreams. However, it may happen that one is required to take a number of loans to complete their education. Post completion of studies students achieves their dream jobs and life that they aspire.
However, the loans taken during the course of studies need to be paid. With several loans comes the worry of paying monthly EMIs and heavy interests. Also with so many loans, one might have different repayment periods, which one can forget also. It is advisable that one should look for consolidation of their debts. Consolidating debt means replacing several loans by one loan.
Student loans are consolidated under the regulation of Federal government. It offers several advantages:
- Multiple benefits in the form of lower interest rate, lower EMI and extended repayment period come with the student debt consolidation.
- Student debt consolidation plans by the Federal government offer complete waiver, in case the student passes or is disabled.
- Consolidation of debt results in a lower debt to income ratio, which has a, positive impact on the credit rating of the student.
One can apply for the debt consolidation without worrying about their credit ratings.
Ways to make Debt consolidation work
Taking care of the following factors will help us enjoy the benefits of debt consolidation:
- It has been found that the debtors generally focus on controlling their monthly budget by means of debt consolidation. Instead of this debtors or students should aim towards debt elimination.
- Low monthly EMI towards loans provides the debtor with higher disposable money. Debtors easily fall prey to the marketing gimmicks of the companies and indulge themselves into unnecessary spending. This forces them to excessive use of credit cards or consumer loans and they again get trapped in further debt.
- Consolidation is a means of temporary relief of debt and not a permanent solution to them. Debtors should look for means to reduce the overall debt burden.
- One should talk to the creditors and understand if they can make partial payments to settle their loans. Prepayments are always welcomed by the creditors, but before going to the same one must clarify from the financial institutions for pre-payment penalties.
With the passage of time one gains experience .It helps get a better job coupled with incremented salary. One should use this situation as an opportunity to clear the debts. Talk to the creditor and increase the monthly EMI to the maximum affordable limit.
Self –regulation and leading a disciplined life is the key to a debt free life. Loan Consolidation provides students an opportunity to have a greater disposable income in the beginning of their professional life by lowering the per month EMI liability. So after a few years, debtors depending on their paying capacity should either get their debt consolidation term reworked to a shorter term or get their EMIs increased and make arrangement to clear the debt at the earliest.