The costs of higher education have been rising steadily since the 1980s at exponential rates. In fact, the cost of a college degree has risen four times faster than the average income in the last 30 years, but at the same time college has become even more important if you want to get ahead in this tough economy. so what are your options? Although scholarships do exist, they are limited, and most of the good money is reserved for sports stars anyway. The most likely opportunity for people to attend college these days is by obtaining student loans.
Student loans can be taken from a variety of places, including the federal government, as well as private lenders and banks. When you take out a student loan it can range from the first year to the last semester before graduation. However, since all loans have a grace period that does not require payment until after graduation or disenrollment, many people do not understand the financial impact of taking these loans until it is too late.
It’s no secret that today’s job market is horrendous and even college grads have a hard time finding stable, paying employment. As a result, many are left with only one option: student loan consolidation, and generally have bad credit to do so.
Bad credit and student loans
It’s important to remember that student loans, unlike many other loans like auto and home loans, are forever. Defaulting on them will send your credit into a downward spiral that will be hard to recover from. Also, since student loans do not go away with bankruptcy, it is imperative to find a means to repay this money. This is where consolidation is really your best bet. Even if you have bad credit due to poor decisions while in college, there are lenders who can and will work with you to consolidate your student loan debt into one payment each month. They can even extend the term of the loan to further lower the monthly payments.
Why consolidation can work
If you’re plagued with bad credit, having a lender pay off all the student loans you have and then issue you a new loan can make a world of difference in terms of your ability to move forward and improve your credit rating. First, the loans that are paid off by the consolidation will help, and then by making timely payments on the only loan you have left, you’ll start to repair your credit again.
The fine print of consolidation
It’s important to remember what put you in the position of needing a student loan consolidation in the first place: bad credit and a history of defaulting on loans. Therefore, you must understand that your bad credit will cause the interest rate you pay to be higher on this loan consolidation, as well as on any other loans you may need to take out in the future. That’s why it’s important to start the repair process so your credit rating doesn’t sit down the toilet. These lenders are taking a chance on you because of that history, however, in the end it will be worth it if you can keep up with your loan payment.
