We err in treating a student loan as a completely different transaction. However, it is very similar to any other loan and this will help us in defaulted a student loan consolidation.

Education has become very expensive and students are opting for loans to repay their debts. However, more than 30% of all students have or are defaulting on their loans. This scenario is equivalent to a financial suicide, because once default takes place, interest runs at a very high rate and the debt assumes impossible proportions very soon.

There are many people with debt in excess of a hundred thousand dollars. There is no way they can repay the debt in time.

Consolidation may work when the amount is not very high. However, in cases where the borrower has allowed the debt to run away to a high amount, ordinary consolidation will not work. A different strategy is required.

The first thing you should do is obtain information about your credit report and your bad credit score. Only then can you proceed to repair it. There are many programs which will help patch up the mess even if you do not have any prior knowledge or experience in undertaking such transactions.

Bankruptcy? Yes or No?

A common misconception is that bankruptcy is the best solution to counter runaway student debt. Nothing could be farther from the truth. Bankruptcy is a big decision which has significant impact. Such decisions should not be taken lightly.

You should adopt a two pronged approach of bringing down your outstanding amount and also removing the late payment report from your file. Your debt can come down by as much as 40% and the reports can be removed in a span of a few days.

Easiest Option

One of the easiest option is to go in for a default student loan consolidation. However, if this is not possible, bankruptcy is not the only way out. There are other options which can be used to stop the situation from worsening. There are time tested strategies which can help you get a grip on the situation.

Irrespective of the course of action that you choose, you will have to improve your money management skills to prevent such a situation from coming up all over again.

Money management is not as bad and as tough as it is made out to be. There are specialized money management programs which will help you manage your finances in a much better manner. Never feel that the situation has gone beyond your control.

Want to know more tips about Defaulted Student Loans?

Visit: http://www.studentloan-tips.com

Consolidating Student Loans Questions & Answers

Question: Is there any benefit to not consolidating student loans?
I graduated from college two years ago, and never consolidated my student loans. I believed (possibly wrongly) that consolidating was only important if I wanted to lower my monthly rates but it wouldn’t have made a difference in the total cost of my student loan. My plan was to pay off large chunks of the loan and to have it paid off quickly. Would consolidating have made a difference in my loans, and will it make a difference now even though I’ve been paying the loans back for two years already?

Answer: There’s a lot of hype out there about consolidation, most of it from companies anxious to get hold of your loan volume. The fact is, consolidation isn’t the right option for every student, particularly if they’re not having trouble meeting their monthly payment, as you seem to be doing.

Best thing to do is call your lender, have them run your numbers, and see if there is a benefit to you by consolidating. Rates have increased since you graduated, so you may actually be better off if you don’t consolidate. Most lenders can also include your separate loans on one bill, so if that would make things easier for you, you can ask them about that as well.

Bottom line, you’re doing a smart thing by paying off more than the minimum monthly payment – this will help you pay less interest over the life of your loan and set you on the way to financial health.

Question: Is anyone consolidating student loans now?
I just got my first bill from my 3 student loan lenders, and my monthly payments equal about $800 a month. I called each company to see if I could consolidate but there is a freeze on consolidation. Even Sallie Mae wont consolidate the 6 loans I have with their company alone. Do you have ANY suggestions on what I could do to prevent defaulting on my loans?

Answer: If your credit is still decent, i think you should be able to consolidate at least some of those loans. Check out the website below for more information.

Question: Any ideas on consolidating student loans?
I have a ton of student loans, that I’ve been deferring for financial reasons. I have federal loans with Sallie Mae and private loans with Wachovia/AES. Any ideas on how to put them all together so I have one monthly payment, to say a bank rather than various companies, like I have now? Any good banks I should try or talk with?

Answer: Your Federal Student Loans can not be consolidated with your Private Student Loans through the FFELP Consolidation Loan Program. In addition, if you were given the option to consolidate your Federal Student Loans and your Private Student Loans together I would not suggest doing so; if you did do this you would lose all your Federal Benefits on your Federal Student Loans.

You can consolidate your Federal Student Loans and your Private Student Loans separately though. If I were you I would keep in mind that July 1st is the interest rate change date every year, so it would be in your best interest to do so before July 1st. If you are interested in Private Student Loan Consolidation, I would wait until after July 1st when programs are expected to improve in that area.

One thing that you may be very interested in when dealing with your Federal Student Loans is; when you consolidate your Federal Student Loans together you not only lower your monthly payments, but you also reset your Deferment and Forbearance time to zero giving you a fresh 3 years of both. For more information please see the source below.

Question: Can consolidating student loans help credit score?
I have a lot of loans, almost 100K as I am getting my PHD. There are number, about 15 individual loans. All other credit is on time and I make a good living. The loans are in deferrment, but does the number of individual loans affect score that much? Would consolidating and paying something on them each month even though they are in deferment help?

I am not looking for information on loans, only their effect on my credit

Answer: Consolidating the loans could lower the amount you pay each month, and lower the interest rate. Shop around they will fight for your note. It could look better on your credit if you had one loan instead of 4-5 in turn could give you a few more points.

Question: Will Consolidating my student loans help my credit score?
I had 6 student loans equaling a total of $20,000 from 2 different companies. My mistake was i didn’t put them into forebarence in time i was late about 2 months. One of the companies wiped it off my credit, the other showed that i had been late. I decided to consolidate my loans with the company that wiped it off my credit. My question is will this help my credit because with the company that had the late payment the loans will have been paid off and with the other i will have been current on all of my payments? Thanks for the help.

Answer: Your loan won’t show as paid off .. but rather as “sold to another lender”. Also, the detail will also still show for the time you had a loan with them. (ie: payments late, highest balance, etc)

Your credit score will increase w/on-time payments … not by changing the owner of a loan. Prior to consolidating, I was surprised to see just how many different lenders once owned my student loans — though I took them all out from the same company. And all those sales amounst the lenders did not affect the credit score.

Question: Does consolidating student loans impact your FICO score?
I’ve got 10 different student loans so my FICO score reflects 10 different installment loans. Would consolidating them into one loan do anything to the FICO score or would it just be a wash since the total amount of debt wouldn’t change.

My downside is that if I consolidate It will take longer to pay off the loans than if I just leave them alone…. I’m wondering how much my FICO score is being hurt by them. Its currently 762.

Answer: It should improve you FICO score. You have a pretty good score already though.

Question: I made a mistake consolidating my student loans. What can I do?
I had several student loans from various lenders for my undergraduate and masters studies. Because I was tired of paying many payments each month to different lenders, I rushed into consolidating without knowing the facts. Now I am stuck at a much higher interest rate and will end up paying 30-40% more in the end!! What are my options at this point??? How can I get myself out of a bad consolidation?

Answer: If you find a better rate, try to… refinance again

Question: Paying principal on student loans while in school & consolidating?
i just got a federal student loan and i received more money than i needed (but i wasnt sure how much id need at the time) so now that i have the check from whats leftover can i pay that back to the company on my loan before it starts collecting more interest…also i plan on paying all of the interest while in school but was wondering if im also able to pay extra while in school without penalty and is this going to apply to the principal?
also ive seen websites on consolidating student loans and making 1 payment… this made me wonder why someone would need to consolidate student loans?what would cause you to have multiple student loans? is thi something thats based on having multiple lenders, schools, type of loans (sub or unsub.)etc… basically i am trying to understand why youd be billed seperately on loans because i would like to avoid this now so i wont have to worry about consolidating later. any insight would help =] thanks

i know the benefits of paying interest as i said in the question thats what i plan to do…i also plan to pay the PRINCIPAL as well in school & was wondering if theres any penalty for paying on the PRINCIPAL while you are still in school

I also understand what consolidating IS i wanted to know what would CAUSE you to have MULTIPLE student loans in the first place..i even listed some possible reasons that i thought may be the cause for more than one student loan in my question…but i didnt know if any of those were the reason for it and i was hoping someone could tell me as i havent found the answer in any of my research or from any of the answers that ive already gotten…if you have the answer i would love to hear it!

Answer: First of all, what kind of federal loan did you take out? If you took out a Subsidized Stafford Loan or a Perkins Loan, then the government will take care of all your interest while you are at least a half-time student, which means that your principle will not increase while you are in college. If you have an Unsubsidized Stafford loan, you will still be compiling interest on your loan, and it would be wise to save any extra money and start repaying your loan.

As far as consolidating goes, a great option is to go with the Federal Family Education Loan Program, or a FFELP consolidation. Many students have several federal loans; I have three myself. Regardless of how many you have, consolidating will significantly lower your interest rate on your loan, and could eventually save you thousands of dollars.

For more information on FFELP consolidation and the application process, please visit the source below. I hope this helped you out! Good luck!