Default Student Loan Consolidation – Weigh up Pros and Cons
Before you try to learn about the benefits and drawbacks of default student loan consolidation programs, it should be made clear that defaulted student loans are considered just as any other defaulted loans. However, studies reveal that almost 30% of the college graduates suffer from defaults of their student loans and they find it hassling and unmanageable to cope with the repayment plans. Default is quite natural because the student loans that were obtained few years ago were at high rate of interest and to complete their education students had to opt for more than one loan as well.
The recently passed out students find it very problematic and majority of them declare themselves bankrupt if the financial problem increases. However, this is not the solution and so the government has initiated to consolidate different types of loans and simplify everything for the borrower. Loan consolidation is not going to help you get rid of your loans but it will combine all your loans together and then you will have to make only one repayment. Another remarkable factor is that due to lower interest rate your amount of monthly installment will also get reduced.
Remember, default student loan consolidation saves you from declaring yourself bankrupt. There are far better options than this and you should also be aware of the consequences of declaring yourself bankrupt. It has a bit negative impact on your entire life and you may regret this in future. It is possible that the lender will pay off all your loans and make fresh ones and adjust all your non repayments adding them to your loan amount. This will also help you repair your credit score and improve your history as well.
Once your student loan is defaulted the entire balance becomes due instantly. Many options like delayed payment and student loan deferment and forbearance get confiscated and you cannot use them after that. You may lose the possibilities of obtaining other federal loans in future. So, default student loan consolidation is the best option for you under such circumstances and you should opt selecting everything prudently.