Suze Orman says time and time again that you should always pay the minimum on your student loan debt because it is debt that you cannot write off in a. So what can you do with student loan debt in order to mitigate its hold over your life? You can consolidate it.
After graduating college in 2005, I consolidated most of my $36,000 student loan debt into one loan at a fixed interest rate of an incredible 2.25% through Sallie Mae. One of the reasons why the interest rate was so low was because I had purposefully kept out a $6,000 private student loan from the consolidation package due to its higher interest rate (9%) compared with the other loans. Overall, consolidating my student loans was a pleasant experience with a distinct financial advantage to me.
But how does student loan compare with other debt consolidations?
It turns out that consolidating non-student loan debt is different from consolidating student loan debt. For one thing, most student loan debt in the United States is guaranteed by the federal government, which is why I did not need any type of collateral in order to consolidate it. With other debt, some sort of collateral (such as a home) is needed as a guarantee to the consolidation company. Another difference between student loan consolidation and other debt consolidation is whether or not there is a fee. You will typically not incur a fee to consolidate your student loans, but you typically will incur a fee to consolidate your other debts.
Have you ever consolidated debt? How was the experience? Did it help you to pay it down?