Naturally, it’s a much better option to consolidate private student loan programs than to default on a private school loan. It can be very difficult to graduate, find a good-paying job that helps you settle down, and balance your daily needs with paying off your school loan. However, this is exactly what financial institutions expect you to do.
The absolute biggest benefit of being able to consolidate a private student loan is that you will have more financing options at the end of each month. While it’s true that loan consolidation programs can be reported on your credit, it’s certainly not as damaging as a delinquent school loan being reported on your credit. Choose wisely and carefully, as this decision may need to be made without sufficient time to fully investigate your options.
Sounds like you should be able to just stop paying your school loan. It’s not like a car that can be repossessed or an apartment rental default that can evict you, right? So when money is tight and decisions need to be made, the school loan is the easiest to ignore. They can’t get education back.
However, it is not that simple. Your bad credit could end up making your education pretty useless if you have to pass a security clearance for your position. This will obviously keep your income low. Defaulting even on a private school loan can still have consequences like garnished wages and tax refund checks.
To effectively consolidate private student loan programs, you need to work with the right agency. There are those that have stricter requirements than others, and there are those that have more specific aspects than others. GPA and payment history may or may not count, so be sure to ask lots of questions about how you qualify.
To consolidate a private student loan, you’ll probably just need to fill out a few applications (usually online) and then talk to a credit relief agent who can lower your payment. Lowering your monthly payment gives you more breathing room than before. You can often find that you are paying 25% to 50% less with a consolidation.
Before you consolidate private student loan agreements and programs, make sure you know what you’re getting up front. Ask how much goes toward the loan and how much the agency retains. You will hear a surprising number of different responses. A consolidation program for a school loan could be simply wanting the money ordered by the doctor to have a little peace of mind and a more fluid income.