Passing your course is one thing, dealing with the debt that comes after you graduate is something that you should make a propriety, getting the interest as low as possible and the monthly repayments manageable is a must. You do have options and you need to look into all that are available to make sure you have the best deal for your situation.
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Your options can involve rolling all your debt into one government backed debt consolidation loan. These tend to have lower interest rates and more payment options.
How Debt Consolidation Works
You bring together all your debts into one loan, and this loan is normally repaid over a long period of time with monthly payments that are lower than the original.
If, for example, you had loans for course fees, personal loans and even credit cards, these can all be amalgamated into one loan with the repayment cheaper than if you were paying them separately. Also the interest that you pay on the individual debt will be quite high in comparison to a debt consolidation loan.
In effect the government is clearing the debt for you and offering a better deal with lower interest rates and repayments, but the term of repayment might be longer.
Government Consolidation Plans on Offer
Family education loan or the (FFEL) offers some products that are backed by the government, but it is not widely understood that the government also provides debt consolidation loans as well.
There are different options which depending on your needs will depend on which option is best for you.
- Standard plan
- Extended standard plan
- Graduated plan
- Income contingent repayment plan
The government backed options give the student the chance to have lower repayments and a combined total with lower interest rates. It is giving the student the freedom to choose the plan that best suits their needs, which is why it is important to look at all options in detail.
The Consolidation Options
The standard plan gives you the low interest rates and combines all your student debt into a loan that is typically repaid over a period of ten years.
The extended standard plan gives you the same low interest rates but the repayment is over a long period, normally about thirty years.
The graduated plan gives you the low interest rates but every few years the payments increase as should the wages of the individual and thereby paying off the loan at a quicker rate.
The income contingent repayment plan also offers a low interest rate but the repayments depend on the income of the student. If the student has a few years of low income the monthly repayments will be in proportion but if the student gets a pay increase then too the repayments increase each month. So the more you earn the more you pay off your student debt.
This type of debt consolidation loan can be the answer for putting the student back in control.