Student loans are deceiving to students. Many students see that they have been qualified for thousands of dollars in student loans and they think, “Hey, I could really use that money for…” The problem is that they don't necessarily require that entire loan to pay for their tuition and books. What students tend to see when the loan check arrives is what else can they buy after tuition is paid. Perhaps it is a new car, tickets to a concert, new clothes, shoes, computer, etc. They don't see the big picture and before you know it they have accepted every student loan that they have been qualified for and the future is looking dim. This is where personal debt consolidation comes into play.
One of the great things about student loans is that when times are tough, you can employ forbearance. Forbearance essentially puts off the payments on your loans so that you can get yourself financially prepared for paying off your debts or taking care of some other debts before focusing on your student loans.
The next strategy to regain your financial freedom is to develop a personal debt consolidation plan. Contact your lenders and get all of your loans into one place. This will allow you to begin making one payment on all of your loans. This is typically the same as you would any other type of debt consolidation loan.
Typically, students do not necessarily have to worry about their interest rate too much when it comes to consolidating their student loans. If the loan is a government-subsidized loan, the student will generally have a pretty low interest rate. Students should look into having their loan payment automatically drafted from their checking or savings account. This will allow them to save even more on their interest rate because many banks are reducing them because you are saving them postage. Another benefit to this is that your payment is always on time providing that you have the funds available in your account.
Students should always alert the lender before missing a payment. The consequences of default on student loans are much worse than they are for your credit cards, for example. If you default on your student loan payment, the bank can garnish your payment from your paycheck and scar your credit rating. It can also make it very difficult to get loans in the future, which can be devastating to a new college graduate that is looking to get a good job, buy a new car, buy a new house and start a new family.