Student loans can be a necessary evil. In many cases, students have to take loans to establish careers, but loan repayment can be really hard on new graduates. It was a long time ago, but I still remember the anxiety that came with getting our first loan repayment bills. Added to that was the knowledge that our interest rates would be going up soon. We panicked and consolidated as soon as possible.
Because we didn’t know any better, our consolidation was through private loan companies. In my case it didn’t matter because my job was not and will probably never be eligible for government student loan forgiveness. However, in Jim’s case, we missed out on $6000 he could have gotten in teacher loan forgiveness. Because we were not smart about student loan consolidation, he consolidated the wrong loans with the wrong company, and we were out of luck.
Sharks In The Water
It has been over a decade since we finished school, and there are now all kinds of new rules and options for student loan consolidation and forgiveness. With no guarantee of a high paying job after college, it’s very easy to see why new graduates would jump at the first chance to consolidate all their loans to get a lower monthly payment. However you should be careful, there are sharks in the water!
Private companies are out there looking to take advantage of the confusion that comes with government loans and repayment options. They offer consolidation for student loans and make it sound like a really tough process, often charging upwards of $900 to take care of everything.
Should You Consolidate Student Loans On Your Own?
In reality, you can consolidate students loans all by yourself. You don’t need to pay anyone hundreds of dollars to do it for you. There is lots of information at studentloan.gov to help figure out the process.
However, just like it’s completely free to do your own income taxes, that doesn’t mean it’s’ always the best idea.The information about loan consolidation and forgiveness is often confusing and contradictory. I spent a few hours on the phone trying to figure out the deal about what loans were eligible for forgiveness and how to do that. It seemed no one could really give me a straight answer until I spoke with the company that held Jim’s loans and found out we had screwed it all up years earlier and were not eligible for any forgiveness. Is there a way to consolidate without ruining a chance at forgiveness WITHOUT paying tons of money?
Student Loan DIY
Student Loans DIY is a company set up by Henry Gerber, who worked in the student loan industry for years. Their plan offers guidance to people hoping to consolidate student loans who might not know how to get started or who don’t want to make a mess of the whole process. They are not a free service, but only charge $49 to walk you through the process.
Student Loan DIY promises to evaluate each situation and make every option available to the customer including;
- Loan Forgiveness Programs
- Income Based Repayment Plans
- Payment Extensions
- What To Do If Your Loans Are In Default or If Your Paycheck Is Being Garnished
What About Private Loans?
Hopefully you managed to avoid private student loans because those are not eligible for government consolidation or forgiveness. There are very few companies who do consolidate private loans, so make sure it’s in your best interest before looking into that option. In my opinion, the best idea if you do have private loans is to work like a fiend to pay them off first. There are always ways to make extra money if you are motivated enough.
Should I Consolidate Or Not?
If student loan consolidation is done so that you can buy a new car and increase your lifestyle while stretching the life of your loans over decades, I would say no. If you are struggling to make your student loan payments and are at risk of default, then I think it is probably a good idea. Remember that student loans are never discharged in bankruptcy and once you consolidate, you can’t ever reverse it. It’s important to keep up with payments and if you do choose to consolidate, make sure you do it correctly and with your best financial goals in mind.
For more information about Student Loan DIY, you can watch this You Tube video or click on the link above.
Did you consolidate your student loans? Was it a good or bad decision?