Student loans are causing so much problems in today’s economy. The younger generation is coming out of college with a significant debt amount to their name – even before they have the means to really pay it off.
This is starting to pose a problem because this particular generation is unable to grow their personal wealth to have enough money to buy a home or their own car. While being tight fisted may have resulted from the financial difficulties of the recent recession, it certainly is also caused by the rising student debt.
This type of debt is not that easy to get rid off – unless you pay it off the traditional way. It takes around 25 years to finish paying off and you cannot include it in your bankruptcy filing because it cannot be discharged. It had become a really hard problem but the government had come up with a solution – but through the federal government still.
One option that people have is through federal student loan consolidation. This involves applying with the Department of Education so they can purchase your loan from the original entity that you got your loan from. The benefit of this is that you get to have a fixed interest rate and is supposedly done to help make payments easier. What makes this different from the private consumer debt consolidation is that there are no additional fees involved.
While this can certainly help with student loans directly, you can also apply private consumer debt consolidation to your other debts. Credit card problems are also bothering people between 18 – 40 years of age. You can use debt consolidation on these too. The goal of this debt relief program is to lower your monthly contributions by stretching your current balance over a longer payment term. Although there is no guarantee, lower interest rates are also part of the goal and if you succeed, that can really lower your monthly payments toward your debts.
Probably the best part about debt consolidation is the part wherein you are taught proper financial management – at least this is true for debt consolidation. As you are paying off your balance through a debt management plan, you will also be educated as to how you can stay out of another financial crisis. The best debt management and credit counseling agencies will offer this service to their clients. Most of the time, this will be given for free.
You will be taught how to budget your money, live within your means and make smarter financial choices – especially when it comes to spending. Of course, the key to make it all effective is to follow and implement what you have learned.
Debt education is an important part of solving any financial crisis because you need to know how you can avoid these instances. That is the first step because knowledge will be your best defense against your debt. Start by knowing how much you owe. There are many debt calculators that can give you a comprehensive analysis of your current situation. Act on your debt now to avoid any more complications.