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?

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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?

4 replies
  1. jana
    jana says:

    We consolidated our debt in the form of a home equity loan. It was a mistake of epic proportions. I will never, ever do that again. From now on, I’m not creating new debt to the point where I need to consolidate anything.

    My husband did consolidate his student loans and it’s worked out pretty OK for us so far.

    • Amanda L Grossman
      Amanda L Grossman says:

      I think many people have done that and then run the debt back up (not saying you guys did that); that was part of the issue why people were upside down on their mortgages.

      Thank you for sharing your experience!

  2. financial resource
    financial resource says:

    You really make it seem so easy with your presentation
    but I find this topic to be really something that I think I would never understand.
    It seems too complex and extremely broad for me. I’m looking forward for your next post, I’ll try to get the hang of it!

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