Borrowing Money For College

Educational costs are skyrocketing with no apparent end in sight

. There are many ways to pay for college education. Obviously, the best way would be to have the college or university extend a full scholarship. However, not everyone is fortunate enough to have that happen. More and more students are finding it necessary to borrow money in order to attend college. Many find it necessary to borrow from more than one source, and when it comes time to repay, the payments are more than a new graduate can handle. One way to handle the situation is to obtain a private student loan consolidation program. Student loan consolidation allows for the combination of multiple obligations, whether they are federally or privately funded.

Before signing up for one of these repayment plans that combines all of your debts into one payment, you should make sure that this is the best option for you. Even though combining payments may appear to be the simplest solution to your economic situation, it is not always best for everyone. Combining all your debts into one repayment plan does a couple of things. First of all, it lowers your monthly obligations, making it easier on your wallet or purse. However, lower payments almost surely guarantee that your obligation will be stretched out over a longer period of time. Because of the interest rate this means that you will be paying more money because the number of payments is increased, which naturally increases the amount of interest paid.

The second consideration is how long it takes to repay your obligation. In some cases, when there is a large sum of money involved, the repayment plan could be as long as 30 years. If you think about attending college for four years, and then think about repaying the money that you borrowed for an additional 30 years, it is conceivable that you would be in your mid-50s by the time you finish paying off your debt. The bottom line for the two scenarios mentioned is that some borrowers may end up paying nearly twice as much after combining all of their debts into one payment.

One more thing to consider is that once you combine your existing debts, the original debt would be repaid. This simply means that you would no longer be able to take advantage of any benefits that might occur for the original plan. In the case of a federal repayment plan, there are sometimes reductions in payments and even a reduction of the overall debt. These would not be available to you once the original debt is paid off.

Perhaps the best way to approach the problem of rising educational costs is to consider some alternative ways of paying without borrowing as much while you are in college. This may sound somewhat obvious, but thinking ahead usually pays dividends. One way is to simply go to a less expensive school. Another possibility, although most high school graduates do not want to consider it, is to live at home and avoid student housing costs. At any rate, if you start to think creatively and logically, you can come up with several ways to hold down the amount of money you borrow.

by: Stewart Wrighter

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