Getting an education is expensive and the debt that comes after quickly graduation can be hard to handle – no matter how valuable and worthwhile a degree is in the long-term. Graduating with a small mountain of student loan debt is a heavy burden on someone just starting out in a professional career. It takes a while, after all, to become established in a career and to reach a maximum earning potential. Learning about managing personal finance and how to practice better budgeting will help graduates understand when it is time to refinance student loans.
Personal Finance Course
After graduation the last thing many students want is to take another class. A recent graduate might be relieved at the thought of taking a break from learning and might cringe at the thought of taking another course. If, however, the graduate does not have experience with budgeting, personal finance training will be worthwhile. Understanding how personal cash flow relates to effective money management – as well as understanding the long-term effect of different student loan consolidation rates- will help former students decide when it is time for student loan debt consolidation.
Manage Personal Finance
Budget planning software is a useful tool that can help a new graduate decide if it is time for student loan consolidation. A budgeting spreadsheet on the computer or online budget software makes it easy to organize and review personal bills. Having a clear picture of how much money is coming into a graduate’s personal finances – and how much is being paid out to creditors helps with managing expenses.
When to Refinance Student Loans
There is normally a grace period after graduation before loan payments begin. Student loan consolidation can be done before the grace period ends. The benefit of doing this, according to the Mahalo website, is the chance to lock in lower student loan consolidation rates. The drawback is repayment begins without delay – taking away the few months of not having to make a student loan payment.
Student loan consolidation basically means taking several loans that accrued during the course of obtaining a college education and putting them into one loan. There are several advantages. The first advantage is only having one monthly student loan payment to manage. Other advantages are only having to deal with one creditor if there is a problem and extending the payments over a longer time period so they will be lower.
Student Loan Consolidation Rates Important to Consider
A potential drawback to college loan consolidation is – if rates go down – the consolidated loan will still be locked in at the agreed upon rate. According to the Simple Tuition website all terms and conditions associated with the previous student loans will be lost – so it is vital that the new loan contract be carefully read and compared to the old loan contracts.
To summarize – a former student considering consolidation should look at several important financial matters.
- Graduates should seek personal finance help as needed.
- Alumnae need to review and understand household finances.
- Former students should compare income to personal finance debt.
- Finally, grads should compare terms and student loan consolidation rates of both the old and the new college loans.