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Student Loan Consolidation – Is It Right For You?

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Student Loan Consolidation – Is It Right For You?

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The student loan crisis in the United States is at $1.5 trillion and climbing. The average student graduates with nearly $40,000 in student loan debt, and for many, that can seem like an impossible debt to pay back. Deferment, forbearance, and eventually student loan default rates are on the rise, and without any real action to change the way student loans are managed, more and more college graduates are going to find themselves in serious financial trouble.

At Student Loan Solutions, LLC, our goal is to help students understand their student loans and the tools they can use to make repayment easier. Whether it's providing budgeting tips or working through refinancing student loans, we are there to help with all of your student loan needs.

Student loan consolidation is a very popular option for many students, as it allows for lower monthly payments often over a longer period of time. If you're not familiar with student loan consolidation, here's what you need to know.

What Exactly Is Student Loan Consolidation?

Student loan consolidation involves taking all of your student loans and combining them into one loan. While there isn't a guarantee that your monthly payments will be lowered, if you've seen a significant boost to your credit or have the option to choose a longer payment term, you may be able to lower your interest rate or extend your payment terms to reduce your monthly payment.

You may or may not end up with a new student loan provider, depending on how you consolidated your loans. As with any decision, there are pros and cons when it comes to consolidating your loan. Before we discuss those, let's take a look at the difference between federal and private loans and what that means for consolidation.

Federal Loans vs. Private Loans

The biggest difference between federal and private student loans is the option for various repayment plans and repayment benefits that you receive with your federal student loans. Income-based repayment plans and extended payment plans are popular with borrowers that have federal student loans, and are benefits that are not offered by all private lenders.

Before you consolidate your federal loans, do diligent research. Consolidation may cause you to lose your federal loan benefits, such as various payment options, forgiveness options, and more. Private loans often have a higher interest rate and fewer repayment terms.

Pros of Loan Consolidation

Make payments easier - if you have multiple student loans, it can be difficult to keep track of all of your payments and their due dates. Debt consolidation combines your multiple loans into one singular loan, meaning one payment per month.

Potentially lower interest rates and monthly payments - while this will vary depending on a number of factors including your credit score, loan balance, and new lender consolidating your loan, there's a chance that you'll lower your interest rate and monthly payment in turn.

Cons of Loan Consolidation

You may lose out on federal loan benefits by choosing federal student loan consolidation - as we mentioned, if you have federal student loans, do thorough research before consolidating your loans. Your new lender may not offer the same benefits and payment terms that originally came with your federal loans.

Higher costs - while refinancing for a longer payment period may help with your monthly payments, it also means that you end up paying a lot more in interest.

No guarantee of savings - consolidation may not be right for everyone, and it's important to realize that consolidation doesn't guarantee that you're going to save on interest or lower your monthly payment.

There's a lot to consider when it comes to consolidating your student loans. If you're still not sure if student loan consolidation is right for you, contact the team at Student Loan Solutions today for your free assessment today.

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Student Loan Consolidation - Is It Right For You? - Student Loan Solutions, LLC

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The student loan crisis in the United States is at $1.5 trillion and climbing. The average student graduates with nearly $40,000 in student loan debt, and for many, that can seem like an impossible debt to pay back.

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As a new graduate, tackling your student loans can seem like a daunting task. With repayment terms that can be 20 years or longer, looking at your student loan balance can become overwhelming if you don't have a solid plan to repay your loans. The faster you pay off your loans, the sooner you'll have that extra money in your pocket every month.

Student loans can hold consumers back from making large purchases such as a new car or a home. If your student loans are holding you back from doing the things you want to do, you're certainly not alone. Paying off your loans early can give you the financial freedom to live the life you've always wanted. Here are some top tips to pay off your student loans faster.

Pick Up a Side Hustle

More than 40 million Americans have a side hustle, and with so many different options out there to earn significant income on the side, there's going to be something out there for you. If you dedicate your entire side income earnings to go toward your student loans, you may be able to pay your loans off much faster.

The average monthly income earned from a side hustle is just over $500 per month, or just under $6,00 per year. If you put that toward your student loans on top of your regular monthly student loan payment, a large majority of that may go toward paying off your principal balance, depending on your overall loan balance, interest rate, and payment terms.

Understand Repayment Options

Federal student loans and private student loans have different repayment options, so it's important to understand how your repayment options impact your finances. Generally, federal loans have a wider range of repayment options that you may be eligible for, such as income-based repayment plans that often include loan forgiveness after a set period of time, or extended payment plans as long as 25 years.

Private loan repayment options will vary from lender to lender, but more private lenders are offering multiple repayment options similar to federal student loan repayment options. With the student loan crisis getting larger every day, private lenders are more willing to work with borrowers on repayment plans that are easier to handle.

Use Multiple Payment Strategies

Aside from paying more than the minimum payment on your loans, whether that's through a side hustle or simply allocating leftover income toward your student loans, there are multiple payment strategies that you can use to pay off your student loans faster.

If you have multiple student loans, as many borrowers do when they take out federal loans, you may want to consider an avalanche vs. snowball debt payoff method. The avalanche method

means paying off the debt with the highest interest rate. Considering federal loan interest rates are set by the government each year, this may not be the most effective or motivating method.

When using the snowball method, you pay off the loan with the smallest balance and move to the next highest balance once your smallest loan is paid off. As you pay off your loans and allocate each monthly payment to the next highest loan, you'll work through paying off your loans faster and faster, giving you the motivation to pay off your student loans sooner.

These are just a few of the many strategies that you can use to pay off your loans faster and gain financial freedom. For even more student loan help, contact the team at Student Loan Solutions today.

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Top Tips to Pay Off Your Student Loans Faster - Student Loan Solutions, LLC

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As a new graduate, tackling your student loans can seem like a daunting task. With repayment terms that can be 20 years or longer, looking at your student loan balance can become overwhelming if you don't have a solid plan to repay your loans.

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What They Don’t Teach in School – Budgeting for New Graduates

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What They Don’t Teach in School – Budgeting for New Graduates

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College graduation is quickly approaching. You will walk across the stage, receive your hard-earned diploma and land your first job. Congratulations! You did it! But before you make any major financial decisions, take some time to make a financial plan, including a budget. Be prepared to tell your money what it is going to do for you instead of the other way around.

Student loans

If you are like most college students, part of your education was financed by federal student loans. Take advantage of your six month grace period to save for your first payment, so you are at least one month ahead. Besides incurring a late fee if it is not paid on time, student loans are reported to credit agencies for better or worse, so make those payments on time.

Speaking of on-time payments, setting up auto bill pay can be the difference between hundreds of dollars in unnecessary late fees and a budget surplus. We are all human, and in this time of busyness, having bills be deducted automatically gives one less thing to worry about. Of course, make sure the dates of the auto-withdrawals coincide with your pay dates!

Let us help you figure out what you need.

Budgeting

Smartphones make tracking purchases easier than ever. To see where your money is really going, download an app of your choice and learn about your spending habits, then make some choices. Do you really need that $4 coffee or can you make it at home? How much money are you spending, a little at a time, on items you may be able to live happily without?

A basic budgeting principle is to simply spend less than you make, and that is good advice, but even if you can technically afford certain items, sometimes that money can be put to better use. A good example is a new car. Many times the excitement of a new job translates into the desire for a new car, and while transportation is a necessity for many, cars are "depreciating assets" which means, unlike most homes, which increase in value over time, the value of a car reduces each year. Instead of financing a $25,000 car, think about buying a reliable used car for less than half of that and use the extra for other, more important financial goals.

Savings

Tomorrow is unknown, and life happens, therefore having emergency savings could be the single most stress-reducing financial decision you could make while you are enjoying financial peace. A general rule is to save at least what it costs to live per month; ideally, a 3-6 month savings is even better, but start somewhere. Make saving part of your budget, like a regular bill. If you learn to live without it, you won't even miss it and you will be so glad it's there when you need it. And you WILL need it.

The future

This may seem counterintuitive, but having a credit card is an important way to build your credit score. Because credit cards generally have higher interest rates, paying it off each month is crucial. All major credit cards are reported to the 3 major credit bureaus, and having on-time payments can boost your score immensely.

There will come a day when you want to buy a house, or you need to purchase appliances on credit - the better your credit score is, the lower your interest rate, therefore your overall purchase price will be. Be mindful of your credit score, of where you spend your money and of how much money you need to live in the present and prepare for the future. Then make your money work for you. It's way more fun that way.

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What They Don't Teach in School - Budgeting for New Graduates - Student Loan Solutions, LLC

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College graduation is quickly approaching. You will walk across the stage, receive your hard-earned diploma and land your first job. Congratulations! You did it! But before you make any major financial decisions, take some time to make a financial plan, including a budget.

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Spring is here! It's the perfect time to take that vacation you've been thinking about all winter. Vacations can be pricey, but here are a few tips for how you can take a great vacation without spending more than you want to:
Look for deals on everything
Apps such as Groupon and Living Social have tons of deals on all kinds of things, including vacation packages, activities, food and drink, and shopping.
Travel with a big group
Traveling with a big group of friends and/or family is not only more fun, but it's also cheaper. The more people there are to split expenses like groceries, lodging and gas, the cheaper it will be.
Travel Cheap
Instead of flying, take the bus or take a road trip. Save even more money by choosing a route so you can camp along the way instead of paying for hotel rooms.

If you need to fly- book early, be flexible, and track flight rates.

Once you're at your destination, skip the taxi and explore the area by foot or rent a bike.
Dine Smart
Buy groceries once you arrive at your destination, so you won't have to eat out for every meal.

Take advantage of hotels with free breakfasts, and always save your leftovers!

Pack your own snacks and BYOB.
Find cheap lodging
Stay with friends or family.

Look for lodging outside of the main touristy areas.

Rent an Airbnb. Airbnb house rentals are a great option if you're traveling with a group of friends- splitting the cost of a house will be much cheaper than multiple hotel rooms.

If you don't need the space and amenities of hotels or rentals, consider staying in a hostel.
Create a budget and stay organized
Decide how much money you want to spend on travel, food, activities, etc. before you leave. Download a personal finance app such as Mint to help you track your spending and stick to your budget.

Stay organized with packing lists, itineraries and travel organizer apps such as TripIt.

Perhaps the best money-saving tip is plan ahead. Take the time to research and plan every aspect of your trip- it will save you money in the end.

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Money Saving Tips for Spring Break - Student Loan Solutions, LLC

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Spring is here! It's the perfect time to take that vacation you've been thinking about all winter. Vacations can be pricey, but here are a few tips for how you can take a great vacation without spending more than you want to: Look for deals on everything Apps such as Groupon and Living Social have tons of deals on all kinds of things, including vacation packages, activities, food and drink, and shopping.

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Personal finance can be difficult. Thankfully there are lots of great apps available that can make it easier. Check out some of these apps that can make it easier to manage your money, track your spending, and maintain a budget.

Business Insider lists some of the best apps to help you manage your money, including:

Forbes lists 12 apps to track your spending, including:

The Balance sorted through several personal finance apps and came up with a list of the 8 best budgeting apps to download in 2018, including:

2. : A bank account and budgeting app all in one.
Price: Free

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The Best Personal Finance Apps - Student Loan Solutions, LLC

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Personal finance can be difficult. Thankfully there are lots of great apps available that can make it easier. Check out some of these apps that can make it easier to manage your money, track your spending, and maintain a budget.

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1. Track Your Spending
The first step in creating a successful budget is figuring out where your money is going. While this may not be an issue for essentials like gas, groceries and rent, you will likely realize how much of your income is going to non-essentials. Tracking your spending will also help you determine how much money you need to set aside for each category of your budget.

2. Make an Expense Calendar
It's easy to forget when bills are due, especially if they're auto drafted from your checking account. Set up a calendar with the dates that bills and other expenses are due or come out of your account. This is also a good spot to keep track of special events or upcoming holidays that may incur extra expenses.

3. Set Goals
Setting a budget is a form of discipline and let's face it - discipline isn't fun. However, it's much more satisfying when paired with a goal. A person who wants to start running usually sets out with a goal of completing a 5K or training for a marathon. It works the same way with your finances. When you're feeling the effects of your tight budget, you can have the motivation of knowing that you're working towards something great, whether it be padding the savings account or paying off a debt.

4. Save First
To effectively save money, it has to be made a priority. Include a savings category in your budget and set it aside first.

5. Separate "Wants" from "Needs"
This is the most effective task in creating your budget. Sometimes our wants feel a lot like needs, but it is necessary to discern between the two. Focus on financial priorities first and if there's room in the budget after that, set aside some fun money.

Happy budgeting!

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5 Tips Towards a Smarter Budget - Student Loan Solutions, LLC

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1. Track Your Spending The first step in creating a successful budget is figuring out where your money is going. While this may not be an issue for essentials like gas, groceries and rent, you will likely realize how much of your income is going to non-essentials.