2010

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Managing Student Debts - Federal Student Loan Consolidation  

How expensive is higher education in the United States of America? Very expensive, as manifested by student loans that can reach more than $100,000. In the past, high-income families don’t really borrow from Sallie Mae and other lenders.

 

Now, it’s no longer simply an option. It has become a necessity. Parents who are worried that they won’t be able to send their children to college borrow money, and eventually the debt is passed on to the university graduate.

 

Federal Student Loan Consolidation

 

Federal student loan consolidation is one of the less difficult ways to repay student loans. Let’s face it- student loans are hefty chunks of debt that have to be repaid within a grace period. According to the National Center for Public Policy and Higher Education:

 

“Only 17% of the highest-income families borrowed for college in 1990, but that figure increased to 45% by the year 2000.”

 

Adding to this alarming rise is the report made by the United States Department of Education:

 

“The average amount of debt incurred by a public college graduate totaled $16,243 in 2000; those who attended private colleges incurred $17,613 in debt.”

 

According to Erica Sandberg, chief financial writer for Consumer Credit Counseling Service in San Francisco:

 

“For those who pursue graduate degrees, upwards of $100,000 of debt has been common, which is indeed very scary.”

 

Grim Times Ahead

 

Only federal student loan consolidation and other measures can save the average American student loan borrower from financial ruin. The figures are simply too high for comfort. With the countrywide recession taking place, it is as if a monkey wrench had been thrown into the efforts of many Americans to save money.

 

However, not everything is in bad order. For example, interest rates that apply to Federal Stafford Loans have become increasingly low. Those who have outstanding balances for their Federal Stafford Loans should think about settling their debt now, while the interest rates are still down.

 

People like Fern Williams White, who was a graduate of Clark Atlanta University state that the debts are simply investments in one’s self. According to White:

 

“I definitely don't have any regrets about pursuing the degree; my salary has pretty much doubled.”

 

Like White, many people used federal student loan consolidation to tackle their debt problems. White was able to consolidate all her loans (five different federal loans) to just one monthly payment. Her monthly payments were unified, and amounted to just $391 a month, or $4,692 a year.

 

Her savings from the well-thought out federal student loan consolidation was about $150, which today is big considering that many fresh graduates are working in a different city on a monthly basis.

 

Thinking About Consolidating?

 

According to Sterling Laylock, an Atlanta-based financial planner, who had also advised White:

 

“Consolidate debt loans can help people with their debt-to-income ratio if they need to go under the scrutiny of any kind of lending institution. If their student loan payments are too high, it can exclude them from purchasing a home.”

 

Another piece of good news comes from Martha Holler, a spokesperson for Sallie Mae in Reston, Virginia:

 

“This is the first time that these rates have dropped below the fixed interest rate of 5% on Perkins Loans, which institutions give to the neediest students.”

 

 

>> Back to Consolidate Debt Loans 2010

 

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Managing Student Debts - Federal Student Loan Consolidation