When consumers are struggling with significant amounts of outstanding balances as a result of loans they took out to finance their college education, they may encounter difficulties in paying them back.
These days, the average college senior graduates with tens of thousands of dollars in student loans in their name, in addition to whatever credit card debt or auto financing they may also have. As a consequence, many may find it difficult to establish their financial independence soon after graduation because they have so many obligations that must be tended to before they can really start building a life as an adult.
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There may be a few problems that most encounter during the few months after their college graduation that can hamper their ability to make payments into all of their various outstanding debts. This includes the fact that the job market for young adults is still extremely difficult to break into and find a salary large enough to cover all of these monthly expenses in addition to the cost of living. Further, the size of all their outstanding balances may be considerable, meaning that they may not be able to contribute as much to some debts, like their credit cards, as they might want to.
For this reason, student loan bills — which can be deferred in some cases for brief periods of time — can be extraordinarily difficult to deal with. They cannot be cleared in bankruptcy filings, if it comes to that, and can often carry monthly payments that are prohibitive to many other financial goals a recent graduate may have.
Personal loans can be a means of consolidating balances into one account for those who are struggling with student loan debts in addition to a number of other kinds of obligations. By getting a consolidation loan large enough to pay off all their other bills, they will essentially reduce their number of lenders from several to just one, potentially lower the interest rate on some of those balances and possibly make it more affordable to make consistent on-time payments.
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A move this drastic will not be without its consequences, however, and borrowers will have to consider how such a decision will affect all aspects of their finances and credit.
Image: Donkey Hotey, via Flickr