Debt consolidation is a strategy to roll multiple old debts into a single new one.
Ideally, that new debt has a lower interest rate than your existing debt, making payments more manageable or the payoff period shorter.
Whether you’re just starting out on your college journey or dealing with student loans from years ago, here is a glossary of helpful terms you may need to know: Accredited: If your college and program is accredited, it means that it has met specific requirements by the U. Administrative Wage Garnishment: If your federal student loans go into default, the federal government has the ability to take up to 15% of your disposable income directly from your employer.
You’ll have to attend an accredited school to get federal loans or use any federal aid.
Some lenders offer a small reduction in your interest rate if you sign up for this. Award Letter: You’ll receive this letter from your intended college.
It will tell you the type of financial aid you qualify for along with the amount.
It takes you ten years to payoff your student loans.
By delaying or postponing the rapid elimination of your student loan debt quickly you can easily waste early years that are critical to saving for retirement. In this day and age with there being significant doubt if public programs like Social Security will be able to adequately assist you when you are old and unable to work, your retirement needs to be a primary consideration in dealing with your debt. Let’s say you graduate from college at 22 with student loan payments of 0 a month.You’ll need a good to excellent credit score — above 690 — to qualify for most cards.Make a budget to pay off your debt by the end of the introductory period, because any remaining balance after that time will be subject to a regular credit card interest rate.More and more student loans are becoming the most problematic debt anyone can own.At some point in the past couple of decade student loans when from a leg up to financial slavery.Consolidation works best when your ultimate goal is to become debt-free.