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Free Debt Consolidation to Assist Students |
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The high cost of education has ensured that more and more students need financial help to finish their studies. The free debt consolidation program was designed especially for students, to make loan payments more manageable. Yet, most borrowers are unaware of its existence. A recent study has shown that more than half of the graduating class of 2004 was unaware of the free debt consolidation Loan Program, which could help cut student loan payments by up to 58 percent. The problem, however, isn't a new one. According to the same study, 53 percent of the graduating seniors were unaware of the free debt consolidation program, approximately the same figure reported in a similar study conducted by the same organization in 2003. As a result, college students usually graduate under a mountain of debt, even as interest rates reach an all time low. Given the challenging job market for this year's graduates and low interest rates, students should be encouraged to consolidate their loans quickly. To do so, they need to plan ahead at the time of borrowing. Only then can they exercise the options available to them at the time of repayment. To get an idea of how much interest is too much, you need to estimate how much you'll be able to pay back once you graduate. That involves estimating your future salary and expenses. The best method is to use a budgeting calculator available on the Web site of major loan agencies, such as Bank of America. These calculators let you estimate monthly expenses, rent, utilities, food, clothes, car payments, insurance, etc. Then compare those expenses to your estimated salary. Some calculators even provide information about salaries. Another source is the Bureau of Labor Statistics salary averages. By subtracting your estimated expenses from your estimated salary, you can predict how much you can afford in monthly loan payments. And free debt consolidation is an attractive option for repayment, because there are no added fees, no prepayment penalties, and no credit checks. Furthermore, the student's loan interests may be tax-deductible. Free debt consolidation has many other advantages as well. It combines several loans with one big loan from a single lender, which is then used to pay off the balance on the other loans. Free debt consolidation can lower the monthly payments and extend the repayment period to a maximum of 30 years, but you'll pay more interest. Even if you have one loan, you can use free debt consolidation to lock in a low rate. However, it has its downside. The free debt consolidation process can take several years. So ideally, you should start the process as early as possible. In many ways it is a good exercise in disciplined spending and budgeting. The first step is to stop using credit cards. Then, chalk out a budget plan so that you know how much you are actually spending. It will help you identify those areas where you're overextending yourself, and what you actually owe. You could opt for refinancing to lessen your load. First, determine what you'd like to refinance and make an appointment with your bank to propose how you intend to make future payments. You also have the option of switching banks if yours is not receptive. If you find the task too overwhelming, your biggest assignment, then will be to find a reputable company that will put together the best possible plan of free debt consolidation for you. There are several options available in the market, including credit counseling; balance transfers; and consolidation loans. Lenders also offer incentives and interest rate reduction plans, so it pays to shop around. But choose well, since some can cost you in the long-term. Members of the Association of Independent Consumer Credit Counseling Agencies and the National Foundation for Credit Counseling are among the most reputed. The former, however, has enrollment fees charges, for debt management. All in all, loans are a viable option for paying for college, as long as you borrow within your means and keep up with repayment. |
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