According to recent reports by FinAid, the total student loan debt is increasing by $2854 per second. In 2011, the CFPB or the Consumer Financial Protection Bureau reported that the total amount of student loan debt now tops $1 trillion and that the students across the country are struggling hard to make ends meet and repay their debt burden. The 2 year default rates for federal loans are rising to 10% in the beginning of 2013 from 7.8% in 2011. The states have been tightening their budgets, including all the funds that are going to state schools and this is the reason behind the colleges facing decreased endowments. College costs have risen by an average of 8% throughout the last few years and this is taking a toll on the personal finances of the students and the parents who have teen kids enrolled in different colleges within the country.
Federal students loans can be consolidated – Are you aware of the benefits?
There are federal and private student loans that can be taken out by the students in order to complete their graduation. If you’re not being able to meet the costs of college, you can certainly take out such loans so that you can fulfill your wish of grabbing a college degree. However, when you make the mistake of taking out too many loans, you might fall in debt due to the increased balances that you incur. Federal student loans have varied debt repayment options and therefore you should leverage them in order to stay on the right financial track. Here are some benefits that you may reap from the federal student debt consolidation loan.
- The interest rates will be lower: The biggest benefit that you may reap from the direct debt consolidation loan would be the lower interest rates. The interest rates are often the biggest reason behind the student loan debt defaults. When you take out a direct debt consolidation loan from the US Department of Education, you can easily help yourself pay lower payments due to the low rates that you’ll be offered.
- The single monthly payments: Instead of having to make multiple payments to multiple creditors, you just have to make a single monthly payment to the US Department of Education so that you’re able to save a considerable amount of money every month. You don’t require remembering multiple due dates and this will lessen your burden.
- Repayment terms: You will be offered different repayment terms among which the Income Based Repayment Plan and the Income Contingent Repayment plan are the most common. You can even switch from one repayment plan to another according to your changing financial needs.
Therefore, when you’re drowning in a sea of student loan debt, choose to combine your debts through the loan lent by the federal government. Straighten your finances and get back on the right track.