When we talk about college graduation, several promising life changes occur in our minds – potential careers, independence as well as new beginnings. However, although it means beginning of something, it still signifies something less enjoyable too – the repayment of student loans.

As you all know, the repayment of ample student loans can be off-putting for both students and their parents. It was found out by the Public Interest Research Group in the US that the average debt among student borrowers is currently in excess of $24,000. Graduates of public colleges and universities usually emerge owing more than $20,000 for their undergraduate years alone. What’s more for those studying medicine or law? For sure, they accumulate even more debt. And, the bad thing is, repaying these debts are even becoming more difficult for graduates in the midst of uncertain jobs and the recession.

With the interest rates in all student loan programs are now at record lows, there is no reason for the graduates not to consider student loan consolidation. It is often said that with student loan consolidation, students and graduates can save thousands of bucks in interest charges.

Student Loan Consolidation: A Definition

Student loan consolidation is typically defined as the process or the act of combining multiple loans into a single loan in order to decrease the monthly payment amount or elevate the repayment period. There are a lot of reasons behind it, and among those is money saving payment incentives, decreased monthly payments, fixed interest rates, and new or renewed deferments.

The Plus Factors of Consolidation

Overall Interest Savings

Over time, the student loans you have borrowed have been assigned with different variable interest rates. Note that the key word here is variable. While the loan you received may have offered, say, 3.5 percent at first, the rate will actually go up as the interest rates go up. So, if you have two or more of these loans, there is a great possibility that you may have owed amounts at different rates, and these rates can rise and fall yearly. Considering that the interest rates have nowhere else to go but up, it is no doubt a safe bet that the debt you have accumulated will mount faster than it would if you consider a student loan consolidation.

By considering consolidation and remaining on your 10 years payment plan, it is possible that you can lock your interest at today’s current loan rates and save some bucks over the long haul. Aside from that, all of those loans that may have come from different lending companies or banks can be a burden to deal with. So, if you consolidate, it means that you only deal with one single company and one payment rather than several. Other than that, you have the great chance to receive added bonuses like payment and interest rate reductions in case you pay your debts on time over a period of months. These benefits are also possible to come if you have automatically withdrawn your monthly payment from a checking or savings account.

Improved Credit Score

By considering a loan consolidation, borrowers not only save or reduce their long term debt but can also help change their credit score for the better over time. It is worth noting that an improved credit score is a very important factor when a person enters the “real” world and wants a new car, apartment or charge card. Also worth noting is the fact that student loans are not discharged if you file for bankruptcy, so you’re on the hook for the loans no matter what your financial circumstances are.

“Paid by settlement” will appear on your credit report, next to your accounts and the accounts will be closed.. That hurts your credit score and your credit score will drop, not as much as when you file for bankruptcy, but you’ll have difficulty getting credit in the near future. It may take a couple of years to improve.

The good news is that your credit score will only be affected temporarily as compared to how long it will take you to pay off the debt paying the minimum payments. That could reach into the 20 year plus range and your rating would suffer the entire time.
By using a reputable debt settlement company, you will not only settle the debt but also get the balances on those accounts to a “settled” status. So debt settlement will not permanently hurt your credit rating. In fact, NOT settling your debt will have a greater impact on your credit score for a much longer time. In addition to getting the debt taken care of, you will also get rid of your physical reactions to the stress of overwhelming debt.

Find yourself a reputable debt settlement company and interview with them. Ask lots of questions and write down their answers. Have all your bills in front of you so you can give them an accurate accounting of your debts. Choose carefully and you will find more relief than just financially and monetarily.

This article will help you get a handle on the possibility of using debt consolidation to avoid bankruptcy.

One of the first steps you are going to have to do is get over feeling ashamed, because you have to have help with your personal finances. It’s true you may have had control over what money you spent or saved, but life can throw unexpected curve balls at you. It can be anything from a sudden illness to a downsizing of the company you work for or running out of unemployment benefits.

If one of these circumstances happened to you and your family, chances are you are juggling which bills to pay each month and still be able to buy groceries and put gas in the tank. 

So now you have to bite the proverbial bullet and get help. Frankly, if you choose the right company or rather organization to help you, it will lower your stress to a manageable level. What you need is a certified and licensed debt consolidation organization.

There are hundreds if not thousands of these non profit companies out there. Many of them will profess to have trained counselors. However, be careful! Many of the so called counselors are simply out to swindle you with high fees up front. Some of these so called, not for profit companies take your money and don’t pay your creditors. The end results being you have late fees and other penalties, such as increased interest, added to your credit card bills and loans.

These added charges can be the straw that breaks the camels back. Ultimately your only recourse will be to file bankruptcy to get debt relief. But this doesn’t have to happen to you.

Once you have found what appears to be a legitimate company, before calling them be sure and check them out. You should be able to call your states attorney to determine if any complaints have been filed. If complaints have been filed have they been resolved or are they still outstanding. If they have a website, look for statements that they are  FTC compliant, licensed and/or an attorney backed solution for consumer and business debt.

Once you get over the guilt of having gotten yourself into your mess, you will be able to move forward and take positive action. Using a debt consolidation organization will make the progress much easier for you. However, you must commit yourself to following the plan made for you. If not you may end up having to do the unthinkable and file for bankruptcy.