Although college graduation is an exciting time for students, it’s also a time of big transitions. Searching for employment and relocating are just two of the challenges graduates face: preparing to pay back student loans is a third.
Today’s economy is amplifying the daunting nature of some of these challenges for college graduates. Many students are facing a job market that is more competitive and uncertain than ever. The 6-month grace period students have until loan repayment begins isn’t enough time for everyone to find employment that will allow them to pay back multiple loans.
The economic downturn means more students may experience financial hardship at the beginning of their careers than in previous years. Consolidation can help students that are finding it difficult to meet their repayment obligations.
When you consolidate student loan debt, financial relief follows. First, your monthly payments will be reduced because you will extend your repayment schedule. Second, you will retain deferment and forbearance benefits in the event that you need them. These are two reasons students should prepare to consolidate debt, even if they ultimately decide not to do so.
A student may choose not to consolidate student loan debt if he or she has only one or two loans and plans to pay them back quickly. If you have variable interest rates on your loans that are favorable, consolidating to a fixed interest rate that is higher may not be an advantage. But if you need financial relief to make ends meet, it’s best to consolidate student loan debt rather than start missing payments.