If you are like most of the college population in America, you will be graduating, or have graduated, with a significant amount of money to pay back to the fed. I’ve been out of school for a quite a while now and I am still paying back my school loans. Student debt is rising every year. The cost to go to college, both as a graduate and undergraduate student, has gone up faster than inflation. So let me tell you, that’s a lot! Pell grants have not kept up, but Stafford loans and other federal student loan interest rates are near record lows (a good thing).
This Is Why Graduating From College Sucks: Student Loan Debt
A recent study by the National Center for Education Statistics shows that about 50% of recent college grads have student loans, with an average student loan debt of $10,000. This is scary since the average cost of college increases at twice the rate of inflation; I foresee the average student loan debt increasing dramatically in the years to come. It is estimated that public school costs an average of about $13,000 a year and private schools costs $28,000 in the U.S.
Reducing Your Student Loan Burden After College
As sure as death and taxes, you’ll have to pay those student loans at some point. There are many ways to reduce to your debt; the most cost effective thing to do is to consolidate or refinance your student loans.
Benefits of Consolidating Your Student Loans
- Reducing interest rates. By locking in at a lower interest rate, you will be making lower monthly payments. Interest rates are near record lows now so chances are you’ll get a better rate now than when you first got your loan.
- Reducing the number of creditors. I don’t know about you, but having tons of different bills to pay at different times of the month is always a mess for me. By reducing the amount of creditors, the process is easier to keep track of payments. More importantly, it means you only have to deal with one creditor if you’re late with a payment or need to renegotiate your loan for some reason.
- Finding loopholes while in college. Of course, you can’t consolidate student credit card debt in with your student loans – this are very different type of debt. However, if you are in school, you may consider taking out a loan to pay off some of your high interest rate credit cards. This practice isn’t something the fed nor schools look highly upon. But taking care of those high interest credit cards by taking out lower interest rate school loans that you don’t pay until after graduating can reduce your total debt after college.
- Private companies to consolidate loans. You can potentially consolidate your private student loans into the same loan. But remember, federally funded student loans have much lower interest rates than private loans, and if you roll them together you would be required to use the higher interest rate – so keep private and federal student loan consolidation programs separate.
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