Meet Gan Golan (in picture) whose attire during the Occupy Wall Street activities accurately described the predicament of millions of graduates and under graduates. The “dressed for the graduation ceremony” attire and the ball chain representing the $26,600 worth of “average loan” each graduate from the 2011 class was burdened with (as reported by TICAS)  leaves no room for confusion.

Why are we recalling an old legend again? Because two things have changed since 2011. These include the “average borrowed loan” and the interest rates, which have risen to $29,400 and 6.8% respectively. Though this picture speaks several blog posts about student loan problems, it does not say an article about how to manage it efficiently. Ergo, this post.

Manage Student Loans through Consolidation

In a few words, consolidation is a type of loan refinancing. A lender takes on the responsibility of paying off your multiple loans. As a result, the total principal of the previous loans is lumped into a single loan, while all their interests are averaged to produce a newer interest rate. The interest rate normally is lower than the net interest rate you were previously paying. Furthermore, the lender will introduce a new loan agreement. This not only increases your loan-term but also reduces your monthly payments and fixates a single interest rate for the entirety of your loan term!

Consolidating Options – Federal vs. Private Loans

Consolidating your loans is a tricky endeavor. Consolidating some loans may lose you certain benefits and hence care ought to be taken while lumping multiple loans. An example is of certain federal loans such as the Stafford and Harvard loans which when consolidated with certain private loans will prove disastrous.

Hence, a rule of thumb will be to consolidate federal and private loans separately, but the right combination of private and federal loans can significantly reduce your monthly cost and stress levels! There are two ways to easily go about them.

The first is extensive homework on the consolidation, its eligibility, its process, and possible consolidation options (our guides might help!), and of course trend reports and newer bills from the Congress!

The second option is to consult a professional consolidation advisor/service provider. They are well equipped with the resources and keep abreast of all the research work in the field!

Conclusion

In conclusion, just keep in mind that the loan that sustained your path through graduation is an investment whose benefits cannot be reaped right off your graduation. The proper way is to consider this loan as an investment and hence its repayment as part of your daily expenses. If you find consolidating somewhat burdensome, then get in touch with a professional and seek guidance. They know the rules of the game well enough to guide you through the whole thing in a breeze!

Sources
http://www.deseretnews.com/article/865578000/Beware-of-the-student-loan-consolidation-temptation.html?pg=all
http://www.marketwatch.com/story/should-you-refinance-your-student-loan-2014-02-04
http://www.marketwatch.com/story/should-you-refinance-your-student-loan-2014-02-04?pagenumber=2
http://moneyfor20s.about.com/od/studentloans/f/studentloangrad.htm