Should I consolidate my Student Loans?

By Rochelle Belnap, The AZCLG (Sept 2014)

Great question!

There are a lot of advertisements out there for reducing your student loans, consolidating your student loans, and getting rid of student loan debt.  Many claim to cut your bills in half, or claim the government is forgiving student loan debts.  So what do you believe?

Student Loans

When it comes to student loan debt you have many options!  But here are a few:

  • Pay them as agreed– using the standard repayment plan.  One flat amount for 20 years or so.  This is for people who make steady good income.
  • Apply for a temporary forbearance based on economic hardship.  So if you are really struggling to make your student loan payments you can apply for a forbearance for a few months, or even a year.  You have to apply and that includes providing documentation.
  • Enroll in the Income Based Repayment Plan (typically only for federal loans)- this modifies your monthly payment based on your income.  So when you make less money your payment goes down, and when you make more money it goes up.  After 20 years, no matter how much you have paid, the difference is forgiven.  So if you owed $60,000 and over 20 years, you only paid $30,000 – the difference of $30,000 is forgiven.  There are cons to this, like receiving a 1099-C, but generally this is a great option.
  • Consolidate your loans.  This means you are combining your loans into one loan.  Why? To reduce the interest rate and have a lower monthly payment.  Why not? There is no turning back.  Once you consolidate, you don’t have the other options available like modifying your payment based on income or obtaining a forbearance.

If you are going to consolidate make sure you are using a reputable company. So Google them first then ask them questions like What is the interest rate? Is it a fixed rate? How long is the repayment plan? What do I need to do to qualify?  If you aren’t sure if you are getting a good deal, feel free to ask! 🙂

Thanks for reading!


Student Loans - Should I consolidate my Student Loans?
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My firm has 3 goals – be cost effective & efficient, make complicated things simple, and change the way people think about attorneys. We do this by offering flat rates with payment plans, educating our clients, and by encouraging everyone to ask us questions to better understand what we do & why we do it. I am a credit attorney and I love helping people with debt and credit legal issues.

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