How to Reduce Student Loan Debt


A sad fact with university life is that you are bound to spend large amounts of money just to scrape by. Often, the money required to finish a degree is money students simply don’t have. Even if students work two or three jobs, scrubbing greasy pans every night, the money would be too difficult to accumulate on time.This is why student loans exist. Student loans allow students to spend the money that is not technically theirs; they’re given the money with the confidence that after college, they would be able to repay the money. The problem is that the repayment rate is far too large for fresh graduates.Know Your DebtsThe first step to reducing any form of debt is to be as familiar with the debt itself, as much as possible. A bad habit with college students is that they don’t think of organizing all the important documents that pertain to their loans immediately. Some don’t even bother to read the documents thoroughly; all they know is that they owe someone some cash.This is not wise borrowing. A wise borrower is aware of his credit history, the interest rates involved and the potentially large amount of money that would be due at the end of the grace period. Some university graduates open their documents after the end of a long haul and discover they owe $70,000. That’s a pretty nasty shock.Specific ResourcesYou may pay the student loan website of the United States government to find out just how much you owe, and the nature of your individual loans. Being consolidated would be much easier if you knew exactly what you’re dealing with.If you’ve been given the loans by a bank or private lender, make sure that all the documents regarding the loans are intact. All receipts and communications should be kept in individual files for easier reference. You would need all these also if you plan to approach a financial advisor for help.For federal loans, it would also be helpful if you read the published guidelines and checklists for the repayment and consolidation of debts. These documents can easily be found in national websites.ConsolidationConsolidation is by no means a simple matter, but it can certainly help those students that have no means to repay a large amount at the end of the month. Again, the crux of being consolidated is you don’t have to deal with rapid changes of interest rates. You’re bound to just one low rate.Federal loans are by law fixed at a certain percentage (often, fixed at 8%). If being consolidated means getting only 7%, you might want to reconsider. Remember, federal loans are consolidated by the government. Private loans are consolidated by private institutions.Private consolidation is slightly different from federal consolidation. For one, the consolidating institutions would be basing the computation of the interest rate on your current living conditions.In addition, market conditions would have an effect on the computation. It might be a good idea to use reliable online loan calculators to find out just how much you would be possibly paying after being consolidated.