According to the Institute for College Access & Success, 69 percent of seniors who graduated from public and nonprofit colleges in 2014 had student loan debt — to the tune of an average of ,950.
While you can’t outrun your student loan debt, you do have options for getting it under control. With a loan consolidation, a lender pays off your various student loans and gives you a new, single loan, often at a lower interest rate. Private loans can only be consolidated through a credit union or bank.
Let’s take a look at the pros and cons of debt consolidation: One of the biggest benefits of debt consolidation is the simplified way you make payments.
Instead of paying ten different lenders, you make one easy payment.
This extra money can be used to build an emergency savings account or used to make extra payments on their consolidated loan.
The irony of debt consolidation loans is the very thing that makes them appealing can also make them dangerous—low monthly payments that make repaying debt easy.
Ironically, in some cases bankruptcy could have been avoided if the debtor had not used a debt consolidation loan and had negotiated with their individual creditors instead.But eventually they’re unable to repay the loans and are forced to file bankruptcy because the debt is just too much to handle.Debt consolidation loans are a great way to pay off debts under certain circumstances.Debt consolidation is primarily designed for unsecured debt (i.e. When you consolidate your debt, you take out a loan to pay off several other debts.This allows you to consolidate the money you owe into one payment.If you fail to make payments on your consolidated loan this means that you mortgage and car loan doesn’t get paid.