Recent college graduates frequently seek student loan debt consolidation to help them handle their finances.
Most of today's college graduates start adult life deeply in debt. The average college graduate has $19,000 in student loans and debts of $40,000 are common.
"Do not accustom yourself to consider debt only as an inconvenience;
you will find it a calamity."
- Samuel Johnson |
Professional school graduates - physicians, pharmacists, veterinarians, dentists, lawyers and others - often begin their practice with $100,000 or more in debt.
That's just their student loans. College students frequently also graduate with hefty credit card balances, too.
Students are inundated with credit card offers as soon as they step foot on campus, and it doesn't let up until long after graduation. Few college students have been taught how to manage money, and they are easy prey for credit card deals.
Imagine your teenager being away from home for the first time and able to sign a credit card application for themselves. They're also young, inexperienced and immature, and many times wind up deeply in debt before they even have an income.
That gives college graduates the opportunity to get snagged by two kinds of student loan debt consolidation schemes: student loan debt consolidation and credit card debt consolidation.
Student loan repayment doesn't usually begin until six months after graduation. This is supposed to give the student an opportunity to find employment before he or she begins making payments.
The student may have several types of loans that come due at the same time - Stafford loans, Perkins loans and private loans.
If two students marry, the total of the payments can be overwhelming, and they are usually given the option for a student loan debt consolidation, which they usually accept.
Once they consolidate, however, the interest rate on the loan increases dramatically. The payments remain low, and, by making the minimum monthly payment, the students can wind up paying off college loans with their social security checks.
When the student loan payments start, it can easily push college graduates in entry-level jobs over the edge, financially speaking. If they have credit card debt, too, they may not be able to make the payments. So they get another consolidation loan.
If they work hard and pay the loans off rapidly, our college graduates may be okay. Too often, though, they've never learned how to manage their money, and they continue to accumulate debt, make minimum payments and never get ahead.
If you're a recent college grad with a mountain of debt, it's not hopeless. You've made some mistakes, but you made them early in your adulthood and you can correct them.
The important thing is to learn everything you can about financial management, debt repayment and income generation so that this is the last time you face a mountain of debt. To be sure, just going for the quick student loan debt consolidation quick-fix will NOT solve your problems.
|
"Never spend your money before you have it."
- Thomas Jefferson |
|
Debt is NOT your friend. It's not a wonderful "tool" for building wealth. That's a myth.
