How to Consolidate Student Loans

Mini graduation cap on dollar bills.

You entered college with the knowledge that earning a four-year college degree would make you vastly more employable. It took long study hours, paper after paper, week-long study sessions before finals, and tens of thousands of dollars. Scholarships probably did not cover all of it so you likely have some college loans.

How to Consolidate Student Loans

In the US, consumers owe more than $1.64 trillion in student loan debt. Even credit card debt measures less – more than half a billion dollars less. About 45 million individuals took out student loans. Nationally, the average college debt equals $29,900. Parents owe money, too. About 14 percent of student’s parents also took out loans with an average PLUS loan debt of $37,200. Sallie Mae tries to recoup its money as quickly as possible so the typical monthly payment ranges between $200 to $299.

Right out of school, you might not make the salary you had envisioned. You could probably make due except six months after you graduate, you owe your first payment on your student loans. Sallie Mae wants its money. Many graduates struggle to re-pay their student loans. You may submit deferment after deferment requests, but the best option remains finding a way to repay.

You do have options. Deferment can help for a short time. Consolidation and refinancing also provide options.

Learning How to Consolidate Student Loans

Before we jump into consolidation, let’s talk about what happens when you apply for a deferment.

Deferment Option


This makes a good option if you just need a few months before you can comfortably begin repayment. A deferment lasts for six months. You can request them more than once. That means if something unforeseen occurs and you cannot start your new job on time, you can also push back the date by which your payments begin. You can download a deferment form from the Sallie Mae website or you can file an online deferment form.

Sometimes, Sallie Mae arbitrarily mails a blank form to you. You need to file it as quickly as possible. Shoot for at least two weeks before your payment due date. Even if you have a deferment pending, you must make your student loan payment.

You must stay on top of your paperwork. You could file for a deferment and think everything has been taken care of, but the deferment could get denied or the agency could determine the form was completed incorrectly. This could put you into default. You can quickly get out of default status by negotiating with Sallie Mae. Go past the customer service representative by asking for a manager or write them a letter that explains the situation. As for a small, good faith payment you can pay to get the loan out of default status. Next, request a hardship payment plan. This lets the agency know that you do want to pay your debt and you take it seriously.

But, let’s look at ways you can avoid needing a string of deferments and how to can completely avoid defaulting.

Consolidating Your Student Loans to Better Manage Finances

Perhaps you’re already familiar with the concept of consolidation of credit cards or loans. If not, essentially, rather than making many smaller payments on a bunch of loans, all of them get bundled together with a uniform interest rate allowing you to make one payment per month. The organization to which you make the payment then distributes it among the various loans.

This can make it simpler to protect your credit and make the payment on time each month. It can also make it cost less each month although the re-payment time period may lengthen.

When you consolidate student loans, you can bundle all of the loan types. Your federal, state, and private loans can all go into the consolidation loan.

Two Types of Consolidation

When learning how to consolidate student loans, your first major decision is how to consolidate. Two main ways exist. You can consolidate with an organization like the Department of Education (DOE) or you can take out a larger loan that lets you pay off all of the student loans and only owe one payment per month.

Consolidation Programs

You can use the Department of Education (DOE) to consolidate or a private bank if you need to include private loans. This type of loan consolidation works similarly to consolidating credit cards through a non-profit. You would pay the DOE a single payment each month which it would distribute amongst the loans.

A private bank would consolidate your loans by purchasing them. Each month, you would make a single payment to the bank to cover the total debt.

Under both of these scenarios, you obtain one interest rate and one monthly payment. This can result in a lower interest rate for you which can save you money. Depending on the term of the loan, you might create much smaller loan payments for yourself. If you obtain a mortgage-like term of 30 to 40 years, you could end up with tiny payments that result in you having more money in your budget for other things like savings and investment. That helps you because investments can grow at a higher rate than the interest you incur on the consolidated student loan. That means you could save up a lump sum to make a balloon payment and get out from under the student loan debt completely.

Consolidation Loans

You can obtain a consolidation loan for any type of loan or debt. It does not apply only to student loans. Using this method, you can pay off both the private loans and the federal and state loans through the government. You do need to qualify for a potentially sizable loan though. This might not present that large of a problem if you already landed a career-level job within the field in which you earned a degree.

Depending on your credit score, you could land a decently low-interest rate. One step in how to consolidate student loans is learning your credit score and potentially raising it before attempting to obtain a consolidation loan. If you just graduated and obtained career-level employment, you should have decent credit so long as you did not jump on the credit card bandwagon during your undergraduate. You need a minimum of 640 to earn a decent interest rate that can compete with the rates your federal loans probably offered.

Once you know you have a strong credit score, you need to study your student loan debt portfolio. You must know exactly what you owe under which program and to what lender as well as your monthly payment to each. Your portfolio might include any or all of the following loan types:

  • Direct Subsidized Stafford Loans
  • Direct Unsubsidized Stafford Loans
  • PLUS loans from the Federal Family Education Loan (FFEL) Program
  • Direct PLUS Loans
  • Supplemental Loans for Students
  • Federal Perkins Loans
  • Federal Nursing Loans
  • Health Education Assistance Loans
  • Private loans

Get Access to All of Your Federal Financial Aid Records

You can look up all of your federal loans in the National Student Loan Data System online. You can access all of your federal financial aid records there.  To determine your total student loan debt before moving forward, you need to use this type of student loan planner.

You will need to look up your paperwork on each private loan by checking your own paperwork or checking with each lender. Chances are that since they want their money, they probably mail you regularly about your payments. This makes it easy to add them to the list and have their contact information at the ready.

How to Consolidate Student Loans: Honestly Assess Your Situation

Do you already have employment that would allow you to re-pay a large loan? If you consolidate through the DOE, can you make their schedule of payments? Here is where the research comes into play. You need to contact each potential consolidation option and ask a few questions.

  • What would the payment schedule be?
  • What would the estimated monthly payment be using each option?
  • Is there a payment forgiveness option for at least one payment?
  • What happens if your situation changes, i.e. your hours get reduced, you lose your job, a medical problem arises, etc.
  • What is the penalty for late payment?
  • Once you consolidate with the DOE or a private lender, you cannot unconsolidate. The only option would be to pay them off completely with a consolidation loan. You then pay the consolidation loan off. What is done cannot be undone. Realize that when you sign the paperwork.

Is Consolidating Right for You?

You should consolidate your loans if your federal loans already entered default status. Doing so can help you save your credit rating. Other scenarios also mean you should consider consolidation.

If you know that you cannot really afford the payments you make each month, and you fear you will make late payments or default, you should consolidate.

You can also consolidate to make bill payments easier. Instead of multiple payments each month, you can make one. This makes scheduling payments simpler. You might end up with two payments if you have both federal and private loans. Besides the no going back to unconsolidated loans caveat, you also need to understand that when you consolidate private loans, you could owe a fee of up to 18.5 percent. That adds to your loan principal plus although you will likely have more years to pay things off, you will also pay more in interest that way. The federal interest rate cap of 8.25 percent remains much lower than credit card rates, but it adds up when you pay off a loan of about $30,000. You will have all new loan terms and conditions regardless of the type of consolidation.

Final Thoughts

Visit the website StudentLoans.gov. Complete the application. Carefully review the summary sheet you obtain once you complete the application. If it all looks correct, life is good. But, if you see a mistake, within 15 days, contact the DOE to correct the information.

If the application gets approved while you were in default, you will choose one of three payment plans and re-enter re-payment. Each option, IBR, Pay-As-You-Earn, and ICR, provides income-based payments. People with no loans in default get to choose from six repayment plans – standard, graduated, extended, income-Based, Pay-As-You-Earn, and income-contingent repayment. This is based on discretionary income and will not exceed 20 percent of what you have available monthly.

You start making your payments again. Voila. You eventually pay off your student loans and get a badge for adulting.

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The Ultimate Study Guide to Student Credit Cards

As exciting as college can be, it’s also a bit overwhelming – and we’re not just talking about the papers and exams that are cramming your schedule. We’re talking about the financial aspect, too. Even if you have financial aid, there are probably some expenses it doesn’t cover. Sure, you could ask your parents for help, but you want to be independent. And anyway, you need to prepare for life after college. How can you do that while paying for your own expenses? Student credit cards.

What Is a Student Credit Card?

Student credit cards are a lot like regular credit cards in the sense that you use them to pay for your purchase and then repay the money. The differences typically come with the approval process and the perks that come with them.

Let’s talk about the perks first. Most regular cards offer perks like airline points or cash back at the gas station. These are great rewards for many people. However, they don’t always apply to students.

You know what does apply? Free annual membership to Amazon Prime, meal perks, and streaming subscriptions.

Those are the types of rewards you can gain from using a student credit card. Even better, some offer things like a statement credit if you keep your GPA up to a certain level. Talk about an incentive to hit the books!

Another difference is in applying for the card. Issuers that offer student credit cards are well aware that you haven’t yet had time to build a credit score. Some students haven’t used their credit a single time. Therefore, they make contingencies for that. They typically go more by income than anything else. And most allow you to get your parents to co-sign or even for you to claim your spouse’s income if you happen to be married. In short, they can be a bit easier to get for many students than regular credit cards.

Reasons to Get a Credit Card As a Student

There are plenty of good reasons to get a student credit card. Before we dive into those, though, it’s important to understand something. Credit cards are handy and can help you out. But if you use them irresponsibly, it can mess you up for years to come.

So as we talk about these benefits, remember that we are talking about responsible credit card usage. Don’t let your credit card be an excuse to go wild and fill your dorm full of stuff you can’t afford.

Now that we’ve had that talk, let’s get to the fun stuff.

You’re in college to learn, right? Why not extend your curriculum to learn how to manage credit the right way? By using a student credit card, you learn how credit works as a whole, how to track your spending, how to pay your bills each month, and more. And these lessons can follow you until the day you breathe your last breath.

Understand that you’re new to it, so you’re going to make some mistakes. That’s okay – we all do. Mistakes aren’t something to beat yourself up over, though. They’re something to learn from, so you can do better next time. So, as long as you’re mindful while you use it, you can learn a lot from using a student credit card.

It’s not uncommon for college students to live on Ramen noodles and to barely skate by with finances. In fact, many people actually enjoy that part – at least to some degree. It’s part of the college experience. However, not a single one of those students will deny that they’d like to order a pizza during all-night study sessions or not have to wait for a monthly stipend to buy deodorant.

Student credit cards can help you get by in between paychecks or monthly allotments without having to call and explain to your parents why you blew all of last month’s. This is, however, one of those don’t go crazy areas. An occasional burger or pizza and purchasing necessities are good. Just try to keep the spending in check.

You won’t always have a dorm room to stay in or student aid to help cover your needs. One day you’ll graduate and, unless you want to move back in with your parents, you’ll need to rent a place. Unfortunately, this can be hard for most recent graduates as you’ve spent the last two to four years focusing on school.

A student credit card can make a big difference at this time. If you’ve been using and responsibly managing your card while you’re in college, you have two to four years of positive credit history. This can help you get approved for everything from an apartment to a new car.

It can even help you land a good job and get lower insurance rates. Bottom line: you can pave a brighter financial future simply by being responsible with your credit before you ever actually need to use it. Who doesn’t need a jumpstart in life?

We talked a little about the perks above, but it’s worth mentioning again. Some student credit cards come with some pretty amazing rewards. Who can’t use a free year of Amazon Prime? Granted, these benefits vary between card issuers, but most offer something that a college student can put to work.

For example, there are some cards that offer forgiveness for one late payment in a given period. Since you’re just starting to learn how to manage your credit, this benefit can be really awesome. Some companies even have scholarship programs for their participants. And most offer 0% interest in your first year of use.

Pros and Cons of Student Credit Cards

Okay, so let’s review the pros and cons.

Pros

  • Ability to build your credit history and score before you’re responsible for all your own bills
  • Incredible learning experience with real-world applications
  • Freedom to take care of needs and wants between checks or allotments
  • Great rewards programs that can help you through your college career
  • Ability to take care of emergencies, like flat tires or dental appointments for toothaches
  • Opportunity to build healthy financial habits early
  • Usually easier to get than a regular credit card

Cons

  • Leads to temptation to spend when you shouldn’t or to spend more than you should
  • Could be stuck with a high-interest rate after introductory offer
  • Irresponsible use can impact your future for years or even decades to come
  • Usually a lower credit limit than regular cards
  • Might need a cosigner or have to choose a secured card

How to Get a Credit Card As a Student

Getting your student credit card doesn’t have to be complicated. You just need to follow these steps:

1. Think about what you need the card for and what kind of perks would be nice for you. Before you start looking for one, it’s better to have an idea of what to look for.

2. Start your engines – I mean, your research. Compare the different cards available to find which one offers what you’re looking for.

3. When you’ve found a few that you like, take a look at their requirements. Determine if you’ll need a cosigner, what types of income they require, what documentation they accept to prove you’re a student, and anything else you can find.

4. Gather all of the documentation you need. The process can move a little quicker if you’ve got everything in hand before applying. And if you need a cosigner, go ahead and talk to your parents at this point.

5. Lastly, it’s time to apply.

5 Best Credit Cards for Students

We’re going to help you get started with your research by showing you five pretty awesome options below.

1. Discover It Student Cash Back

This card is a pretty good one, as it’s really easy to apply. You don’t even need a credit score to do it. And yet, you can earn 5% cash back on pretty much anything you buy using PayPal.

So, when you go on an Amazon shopping spree or splurge on pizza night – or do the responsible thing and buy school supplies – you’re earning 5% of that back. If you don’t use PayPal, you still earn 1%. Even better, they match everything you earn that first year.

You also get 0% interest for the first six months. Unfortunately, that can jump up to 22.74% after that period, so you’ll need to be prepared for that.

2. SavorOne Student Credit Card from Capital One

If you like the idea of cashback and monetary rewards, this is a pretty good card. You can earn 3% cash back on streaming, dining, entertainment, groceries, and more. And you earn a $100 cash bonus if you spend $100 on your card within three months of getting it.

There is no annual fee, which is great. At this time, though, there is not a 0% interest rate introductory offer. Instead, you’ll pay 15.24% to 25.24% from the beginning. They do run introductory offers sometimes, though, so look into it before you avoid this card.

3. Chase Freedom Student Card

The Chase Freedom Credit Card is a little different than the other options on this list so far. It offers a lower cashback amount at only 1% on all purchases. This might seem undesirable, but it can actually be nice.

It means you don’t have to keep up with how much you’re earning – it’s the same amount all of the time. And, unlike most cards, you don’t need to hit a minimum balance to redeem those rewards. You can redeem them at any time – no matter how few or how many you have available.

There are some other benefits, too. For instance, you get a credit limit increase after you make five timely payments. There’s also no annual fee and you get $50 after you make a purchase using your card in the first three months.

4. Bank of America Travel Rewards Credit Card for Students

If you’re going to college a long way away from home, this might be the best card for you. The Bank of America Travel Rewards Credit Card for Students allows you to earn 1.5 travel points on every single dollar you spend.

And if you spend at least $1,000 in the first 90 days, you get a bonus of 25,000 points. These can come in really handy when it’s time to fly home for the holidays or during summer break. And the good thing is you don’t have to worry about blackout dates.

Additionally, there is no annual fee. You get 0% interest for the first 15 billing cycles, but that can increase to 24.74% once that intro period is over.

5. Journey Student Credit Card From Capital One

For those who love to stream, the Journey Student Credit Card from Capital One gives a $5 streaming subscription credit each month as long as you make timely payments. Subscriptions like Amazon Music Unlimited, SiriusXM Streaming and Satellite, Spotify, Disney+, and Prime Video are all eligible.

Additionally, you earn 1% cashback on all purchases. And you can increase that to 1.25% if you make your payments on time. There’s no annual fee, but the interest rate is 26.99%. That can quickly add up. The best way to earn all of your rewards and prevent yourself from having to pay such high interest is to pay your balance before the end of the billing period.

How to Responsibly Manage Your Card

One of the most important tools you’ll learn to use as an adult is a budget. It is a clear plan about what you need to pay and where to send your money each time you get paid. That helps you make smarter buying decisions, as you know how much money you have for extras.

As a college student, you might not yet know how to budget or be very comfortable with it, but there is a simple solution for it. Head to the Goalry Mall and sign up for your member key. There you’ll find a budgeting tool that can help you stay on track.

You’ll also find other financial tools and a plethora of educational resources that can teach you everything you need to know about finances. By the time you graduate from college, you can be a master at managing your money.

Conclusion

Student credit cards can be a very helpful tool – as long as you manage them responsibly and find one that suits your needs. Take the time to look through the options listed here as well as any others you come across. Compare them before making your final decision. Then, put a budget to work to ensure that your card helps you instead of negatively impacting your future.

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Traditional Student Loan Versus An Income Share Agreement

College is expensive. I am sure you are thinking ‘yeah, no kidding’. There is not a student (or parent of a student) out there thinking about college that is not also thinking about how to pay for it. According to Educationdata, the average cost of tuition in 2022 was around $35,807 for private institutions and close to $10,000 for in-state residents at public schools. Fortunately, students can find help to pay for college in the way of student loans. There is another tool available that many may not know about and that is income share agreements. Continue reading to find out more about traditional student loan versus an income share and how each option may be beneficial to you.

What Is A Student Loan?

When considering a traditional student loan versus an income share, it is important to fully understand the difference between the two. A student loan is money you borrow to pay for school that you promise to repay with interest. Loans can come from different sources and there are benefits to each one. The amount of money you can borrow depends on if you are an undergraduate or graduate student. It also depends on if you are a parent or a professional working student. You do not have to repay most student loans until you either graduate from college or become a part-time student. However, some lenders expect repayment immediately. Most loans have flexible repayment plans and are easy to finance or postpone.

Typically the interest rate on a student loan is fixed and lower than most other interest rates. Often you may not need a credit check to have a student loan approved. When making the decision about applying for loans to pay for college, weigh all of your options carefully. It may not impact you today, or while you are in school, but it will. You have to pay back the loans once you graduate and the decisions you made years earlier may come back to haunt you.

What Are The Different Types Of Student Loans?

When considering traditional student loan versus an income share, you should know the different types of student loans. The main two categories of student loans are federal student loans and private student loans. There are some differences of which you should be aware. Federal loans come from the federal government. Private loans come from a bank or any other private financial source. No matter from where the loan comes, be sure to understand all the details of the loan.

With a federal loan, you do not make payments until you graduate, leave school completely, or become a part time student. Some private student loans require payment fight away, but may have an option to defer payments. Federal loan interest rates are fixed and typically lower than any other loans. Private loans may have either a fixed or variable rate. They could be the lowest interest option, but rarely is that the case.

Often times, federal loans may have subsidies for those who meet financial requirements. In those cases, some or all of the interest on your loan is paid for you while you are in school. Private loans rarely, if ever, offer any type of subsidy. Private loans typically require a credit check and want you to have credit established or a cosigner. Most federal loans, except PLUS, do not require credit checks.

Private vs federal loans

What is An Income Share Agreement?

Income share agreements may be something about which you know little. An income share agreement is typically set up with the school in which you plan to attend but can be another institution, where you agree to pay the tuition later when you have a job. You are borrowing the money for your tuition and agreeing to pay your tuition with a percentage of your future earnings. In a sense, you are using yourself as equity.

You are saying that the education you get today provides you the opportunity to gain employment that allows you to repay the loan. The amount you can borrow depends on your major and the length of the loan. Keep in mind, the school is projecting how much money you will make if you find a job. The amount you are able to borrow may not cover your tuition needs, so you might have to get another type of loan.

Are There Benefits To Student Loans?

One might say that a major benefit to any type of student loan is you are getting money today to go to school. For some, that is enough. The plan to figure it out later. They feel that if they do not go to college, they will not be able to get a job or be stuck where they are. They would rather risk taking on debt to try to secure themselves a future. That is a definite benefit to student loans. When students consider traditional student loan versus an income share, they may only look at who is going to give them the most money all at once.

Believe it or not, the federal government often offers the best loan terms. Do not shut down that option before looking at the details. However, that does not mean you should only consider a federal loan. You need to consider all of your options. That includes scholarships, grants, and work study. There may be other ways for you to get money to go to school. You need to put all your options all the table, look at the benefits and negatives and make decisions that are in your best interest.

Pros and cons of student loans

Are There Benefits To An Income Share Agreement?

The intention of income share agreements is to provide you the money you need for school with the promise to repay the loan once you have a job. It intends to keep you from having to pay a ridiculous amount each month in student loan debt. It caps the amount you pay back per year by making it a percentage of your earnings.

If you get a raise, the percentage does not change, but the amount you repay does because you earnings increased. No matter how you slice it, you have to pay back money. If you are like most college students, your income is going to be low, much lower than you think it should be. If you are like most college students upon graduation, you will feel weighed down by the burden of your school debt.

Unfortunately, there may not be anything you can do about that, unless you manage to leave school with no debt or loans. If you come from a wealthy family, that may happen for you.

However, if you are like most college students, that is not the case and you will have debt. As I stated many times in the article, you have to do what is best for you and your particular circumstance. Any size does not fit all and what works for your bestie may not be right for you. Educate yourself on all of your options before making a decision.

What Are The Negatives To Student Loans?

When thinking about traditional student loan versus an income share, the one thing that remains true about both of them is they are a type of loan. When you borrow money, you must repay it at some point. That has to be the biggest negative to student loans…paying them back. Depending on the type of loan, you may be able to defer the repayment but there always comes a point when you need to pay it back. Really, there probably is never a good time. Unless you have found the job of your dreams making a ton of money and you have extra money to spare. It is a great dream, but unlikely to happen. For your sake, I hope it does.

A student loan could possibly hurt your credit score. We will talk in depth about that a little further down. In general, if you stay on top of your payments, it should not hurt too much. Student loans are a burden. They are a burden to you, your parents and our economy. That is the largest downside to the trillions of dollars in student loan debt.

The Downside to Income Share Agreement

I have talked quite a bit about student loans in general. When it comes to the traditional student loan versus an income share debate, there seems to be more negatives to an income share agreement. Ok, maybe that is not fair. The better way to say it is there are more positives to a federal loan than an income share agreement.

The major downsides to an income share agreement is the limit on funding you receive. Each school has a cap, which varies from school to school, on how much they loan a student. Most likely, this amount does not cover tuition for a year. That means you have to find other ways to make up the difference. Perhaps it is not a significant amount and you find a job that pays you enough. Maybe your parents can pay the difference. But, what if none of that applies to you? Then you need to get another loan. So in addition to the income share agreement, which, let’s be real, is a loan, you need to get another loan. Upon graduation, you have multiple loans you must pay. Federal loans tend to be incredibly flexible in payment amount and when you start, but income share agreements may not have that same freedom.

What Makes The Most Sense For Me?

I hope I have been successful at driving home the point that there is no right answer for everyone. The best thing looks a little different for each person. When you are deciding about traditional student loan versus an income share, keep yourself in mind. You must consider your finances today and the goals you hope to achieve in the future.

Keep in mind, you are making decisions based upon what you want in your future. You are guessing about the type of job you have and the salary that goes along with you. I know you all have dreams, but when making decisions about college loans, you have to think realistically. Otherwise, you may set yourself up for a large amount of debt that you are not able to repay.

Yes, it is true, federal loans are a little more forgiving. As surprising as that is, it is true. They work with you to create a repayment plan that works for you. They are willing to defer more often based on your circumstances. In some cases, with specific rules, they may completely forgive a portion of the loan so you do not have to repay all of it.

What If I Can’t Find A Job After College?

When talking about paying back a traditional student loan versus an income share, you should attempt to pay the payments you can. Student loan debt is an astonishing plague on recent graduates. You want to do everything you can to pay it off as soon as you can. Hopefully, you can find a job in your field and begin your career path. If you are not able to do that and you cannot pay the bills with the job you have, what do you do?

I am going to start by telling you what not to do. Do not ignore your loans. Do not ignore your debts. You either must pay them or contact the lender and set up some other type of agreement. You should never just ignore them. That is a bad idea. In as short as 90 days, your loans are delinquent and you start getting late fees. The lender most likely reports your late or missing payments to the credit bureaus. Then the phone calls begin.

In six months, you officially are in default. When this happens, your balance is due immediately. Not only that, but chances are no one can help you by deferring your payments or creating some other type of payment plan. The sad thing about this is, if you just contact the lender, you can do something. You can defer your payments until you are more stable financially. You may be able to set up a different payment plan allowing you to pay less money per month. I encourage you to take that approach if you find yourself in this position.

Can I Refinance My Student Loans?

You might be able to, depending on the type of loan you have. The amount of average college debt is astounding. The cost of higher education is to blame for this inflated debt. Americans owe roughly $1.5 trillion in student loan debt. That is just crazy.

The first thing you should know about federal loans is that you cannot refinance them. These interest rates are set by Congress and become law. Your credit score, no matter how good it is, does not change your interest rate on a federal student loan. However, you may be able to refinance your federal loan into a private loan. You should only do this if you can find a better deal than the current interest rate on your federal loan.

You should use a loan refinance calculator to determine if you can find a better rate. This is a tool where you enter your current loan information, including how much you owe and the interest rate. This tool may also ask you what you believe your credit score is currently. The calculator gives you a list of potential lenders that offer a better deal than what you currently have. Keep in mind that when you refinance a loan, it changes the terms of the loan. That means if you current loan takes you two years to repay it, refinancing it may take you four years to repay it. You must always look at all the details before agreeing to refinance your loan to ensure it is a better deal for you.

What Are The Impacts On My Credit?

When considering a traditional student loan versus an income share and the impacts to your credit score, it is important to know that they can impact your credit in the same way. As long as you pay back your loans timely, it should not impact your credit score at all. The key is to make regular payments on time for the full monthly amount. Another item of note is that when you make regular timely payments, that can positively impact your credit score. Those payments may help your credit score increase.

The key here is the same with any type of loan or bill that you have. If you pay them on time and for the full amount, it typically does not hurt your credit. When you do not make regular and timely payments, the effects are devastating. Not only does it hit your credit hard, but it adds stress to your life.

Once you credit score has been negatively impacted, it takes hard work to improve it. In addition, you may not be able to get other lines of credit for a house or car. You may not be able to get car insurance. It may interfere with your ability to rent an apartment. When you do not pay your student loans, it has far reaching implications. It impacts things that you probably have not even considered. You want to do everything you can to pay your student loans on time each month.

How Can A Budget Help Me?

It always comes back to the budget, doesn’t it? It seems that no matter the subject, having a budget is always a good idea. I know it is hard when you are not making a ton of money to even consider a budget. Truthfully, this is the best time for you to start one. There are plenty of application available to you to help you create a budget.  Right now, you (hopefully) do not have many bills. I realize you may not have much income either, but that is exactly why a budget can help you.

You write down all of your expenses and all your income. After you have listed all expenses, see if there are any that you can get rid of. Do you have a gym membership or subscriptions you are not using? Cancel them immediately. That is a quick way to clean up your budget. Are you spending money on useless things? Now is the time to stop. Before you begin to create some really bad habits or get used to a certain lifestyle, cut those items.

When you create a budget, include a percentage of your income that automatically goes to savings. Make sure it is a percentage. That way as your income increases so does the amount of money you are saving each month. Trust me when I tell you, now is the time to start. Create these healthy financial habits and you will not regret it. Yes, it may be difficult at first, but it will be worth it. Once you get used to living with less money and your savings grow, you will be so happy you did it.

Conclusion

One last point I would like to note that I have not mentioned, any student loan payments you make may be tax-deductible for you. Make sure you have a 1098 e form that shows all payments you have made so that you can claim that deductions on your taxes. I gave you a lot of information to consider about student loans. It can seem overwhelming, I know. I am sure that you do not want to make the wrong choice. Believe me, I completely understand. Making lifelong financial decisions are tough. They should be.

You do not want to make any of these decisions without thoroughly thinking through them. You want to weight the good and the bad and make a sound decision. Be sure you understand all aspects of your loan options. If you do not fully understand them, talk to a student loan planner. That person has a vast amount of knowledge to help you make the right choices. There is no shame in reaching out to someone who has more knowledge than you to get all the information you need.

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