College graduates are drowning in debt

It is not uncommon for many college graduates to be saddled with $50,000 worth of debt upon finishing school. Most of this debt is outstanding student loans. Unfortunately, these loans generally come from multiple sources. Some might be federal loans and some might be private loans, all of which will have different balances, as well as different interest rates.

Example of what consolidation loans clean up

For example, if you have both subsidized and unsubsidized federal student loans you probably have the same interest rate; however, while you were in school the federal government was paying the accruing interest for you on the subsidized loan, while the interest was accruing on the unsubsidized loan. In contrast, nobody was paying the interest on your private loans, which also have a significantly higher interest rate than your federal loans, i.e. your interest rate on your student loans may have been 4%, but the rate on your private loans is probably around 5% or 6%.

Consolidation loans at work

To help you avoid making multiple loan payments with different interest rates every month, college consolidation loans work by giving you one loan which pays off all of your multiple loans so that you only have to make one payment per month. The interest rate on a college consolidation loan is the average of all the interest rates on your multiple loans; however, by law it cannot exceed 8.25%. Generally, you will be paying less every month by going this route.

Consolidating makes life easier

College consolidation loans can be a life saver to the recent graduate who is faced with the challenge of finding their niche in the workforce. This can be a hard enough task without having to worry about paying multiple student loans each month. So don't delay. Any of the financial institutions you have your loans through will have college consolidation loan programs you can take advantage of. It will be one less worry for you now that you've entered the real world.