Do you have bad credit and thousands of dollars of student loans to repay? Few students plan to start their post-college life this way, but it's a common situation. You may realize that it's important to put together a debt reduction plan, but you may not know where to start. Consider the following steps to begin paying down student loans, credit card debt and other bills.
Debt consolidation for federal loans
Student loan debt consolidation may be the best solution if you're juggling multiple federal loans. Consolidation of your federal loans, which is usually done separately from your private loans, will often result in lower monthly payments. The interest rate on a consolidated loan will typically be the weighted average of the interest rates on the original loans, rounded up to the nearest one-eighth of a percent and capped at 8.25%.
Private student loan consolidation
Your credit score is an important factor when you consider a private student loan consolidation. Depending on your credit, consolidating private loans may or may not make sense. You probably want to consolidate debt from private loans if your credit score has significantly improved since you borrowed for school. If your credit score has declined since then, consolidating may not offer a better deal. Also keep in mind that when you consolidate debt from private loans, you may be offered a fixed or variable interest rate. It is important to note the difference to prevent your payments from rising in the future.
Suspending loan payments
Other options that could help if you're having trouble paying student loan debt is to get a deferment or forbearance, which would suspend payments for a period of time. During a deferment, the government pays the interest on your subsidized federal students loans. If you are granted a forbearance, you are responsible for the interest that accrues during that time.
Chances are if you're struggling to pay student loans, you may also be dealing with credit card debt and other bills. If you are in over your head with debt, find a reputable debt counseling firm that can help you put together a plan to clean up your finances.
DIY debt consolidation: 3 secrets for success
You're sinking fast in credit card debt, and there's not a life preserver in sight. Loans and balance transfer offers involve applying for more credit. Follow these tips for rescuing yourself from the dangers of excess debt.
Reducing debt or building savings?Even if you are following a debt reduction plan, it is important to try and build emergency savings.
When debt help is not enough: 3 reasons for filing bankruptcySituations can arise that make paying your bills impossible, or that render you ineligible for participating in debt relief efforts such as credit counseling. When you're enduring any of these circumstances, consulting a bankruptcy attorney can provide information about your rights and the consequences of filing bankruptcy.
Personal spending rises as income slipsPersonal income declined in August, but personal consumption expenditures rose, according to the Bureau of Economic Analysis.
3 reasons for consolidating credit card debtAre you paying more than one credit card bill each month? Have you overlooked a bill and incurred penalty interest rates or late charges? Consider credit card debt consolidation for simplifying debt management chores.
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