Hello!

And welcome back… I’ve been neglecting my blog and have been getting quite a few questions in.

My latest question comes from a friend who recently graduated – and doesn’t know what to do with her student loans, she can’t afford to make the monthly payments (she took out WAY too much money, not considering what would happen once she graduated).

If you are in this situation, my best suggestion is student loan consolidation. I had a friend (bookworm’s boyfriend) who had taken a lot out in student loans. He graduated from law school last May but now is over $80,000 in debt – and didn’t know how to make those payments.

All together, the companies were asking for a monthly payment over $600 – and he still needed to pass the BAR before he could practice law. He did and got a job in January, but it still doesn’t pay enough to make close to $600 per month in student loan payments, a car payment, rent, and other normal living expenses.

My biggest tip for him (as it is for my other friend) was student loan consolidation. This can help you save quite a bit in monthly payments – he saved about $200 per month once he consolidated. Now this does lengthen the time period you have to pay back the loan (from 10 years to 25) but you can actually afford to make your student loan payments. And, in all reality, you shouldn’t be waiting the full length of time to pay back your loans. You will be paying more total – if you take the full 25 years to pay back the loan. But you can have substantial savings if you earn the interest rate discounts and take advantage of the fact that there are NO prepayment penalties.

Now, this is really geared towards federal student loan consolidation. After you consolidate your federal student loans, you may be able to pay more towards any private student loans you have – which will accrue a lot more interest than your federal loans. Be sure to put any extra money you have towards these first – you can save a bundle in the long run!

Also, student loan consolidation may help improve your credit rating - most loan officers will suggest that you consolidate your student loans before you apply for a mortgage.

Now, if you haven’t noticed – I’m strongly suggesting you use NextStudent to consolidate your student loans. I know they are a good company that really wants to help students.