To their credit, student loan lenders are some of the fairest in the country.
- They allow you to go into forbearance when your financial situation becomes unmanageable;
- They will work out fair payment plans with you; and
- Their interest rates are manageable if you’re not experiencing financial difficulty
However, those student loans won’t go away no matter what. Even if you can’t get a good job with the education they paid for, you still need to pay back your student loans. And while they’re in forbearance, they will continue to acquire interest. However, student loan refinancing and debt consolidation companies are finally offering new hope to debtors.
Choose the right student loan program for your debt consolidation by asking the right questions:
First, you should ask what you would have to do to be eligible for loan forgiveness. If you’re willing to work in certain industries, like education, public service or the military, you can get part or all of your student loan forgiven. Check with your agent and see if a career you’d be interested in falls into these industries, so you can qualify for forgiveness. There is also a government program called Pay as You Earn that allows you to pay back your loan based on your income.
Do they process bi-weekly payments? It’s highly unlikely that you will find a company that doesn’t take automatic bill pay. And most lenders will give you a .25% discount on your interest rate if you sign up for automatic bill pay. However, not everyone will allow you to make bi-weekly payments. Some will let you auto pay once a month and accept a check or money order during the month. However:
- Bi-weekly payments equal out to about 26 more payments a year,
- You’re paying the same amount of money, but making more frequent payments, so you pay less interest and you’re shaving off years of repayment time
What are you looking at financially in the long run? Make sure you know exactly what you’re paying every month and for how long before you sign up with a company. You might realize that you don’t want to pay off your student loan debt for 10 more years; or that your payments are too high to manage because of personal plans you have in the coming year.
Remember interest rates can add up, so take your agent’s suggestions, but don’t allow him or her to choose your solution for you. Make sure you look at all your options when it comes to changing payment plans, refinancing and pre-paying before you choose the option that’s right for you.
Are you eligible to refinance? Many companies will allow you to refinance instead of consolidate; if you’ve gotten a better job or have a more manageable budget. Refinancing can save you over $11,000 on your loans; so for many, it’s the best option if they qualify.