The student loan debt bubble is looming larger – Is there any solution?
According to recent reports, the student loan debt bubble is reported to loom larger as more and more students are being unable to pay back their student loans. With the slow recovery of the job market, the students are suffering from lack of cash due to which they can’t make ends meet. Apart from owing money on their student loans, they’ve also misused their credit cards and have accumulated huge amount of debt.
In order to bring the students out of this financial mess, the Federal government lends them the direct debt consolidation loan through which they can get back on track. Have a look at some of the benefits of the direct debt consolidation loans lent by the US Department of Education.
- Make payments to a single lender: With your multiple federal student loans, you must have become tired of making multiple payments to multiple lenders. If you take out a direct debt consolidation loan from the US Department of Education, you have to make a single monthly payment to them. Hence you can relieve yourself of the hassles of remembering multiple due dates on which you have to make payments.
- Revised interest rates: The high rates on the student loans increase the payments and this is probably the biggest reason of the defaults. But the direct debt consolidation loan will carry lower rates than what you were paying on the educational loans. With revised rates, the monthly payments can also be lower and you can therefore save your dollars every month.
- Different repayment plans: The US Department of Education, after assessing the present financial state of the student borrowers, have decided to offer different repayment plans according to the needs of the students. Ass they live on a fixed income level, they will offer you plan like Income Based Repayment Plan or the Income Contingent Repayment Plan. You’ll even have the permission to switch from one plan to another according to your changing financial needs.
- Revised monthly payment: With lower interest rates, the monthly payments that you have to make towards the direct debt consolidation loan will also be lower and this will enable you to save enough money. Ensure saving the money so that you can use it in the future to pay off your credit cards, if needed.
- Boost your credit score: Being a student, it is necessary for you to maintain a good credit score as the employers often check this before hiring you into their organization. By consolidating your debts, getting lower interest rates and by saving on the monthly payments, you’ll be able to pay back debt and thereby improve your credit score gradually. Being smart about debt is always important to improve your credit score.
Therefore, when you’re spending sleepless nights wondering about the way in which you can get out of the debt cycle, take out a direct debt consolidation loan from the government. However, you also have to make sure that you qualify for the loan.