Managing Your Consolidated Loan

Getting Started With Your New Loan

Once you’ve signed an agreement with a company to consolidate your school debt, the first thing they will do is send payoff amounts to the various lenders that you owe money to and request that the accounts be closed and marked paid in full. Your now former lenders will do so gladly, send you notices of appreciation and you will no longer owe them anything. The next step will probably be a boon to you in that your new consolidation company probably won’t require the first payment from you for a month or more giving you just a little breathing room. Note that this is not the time to throw a party with the extra money you may save in payments, rather it would be a good time to get a little savings started toward paying this new consolidation debt in the future.

Regular Monthly Maintenance of Your Consolidation Loan

In a few months you will settle into the ease and convenience of making only one payment per month where before there may have been three or four or even more debt payments that you had to make every month. If you’ve never lived on a budget before, your new consolidation is a good excuse to learn to start living on one. A budget is simply a monthly plan where you determine—in advance—a destination for every dollar of income you have. This would include setting aside a certain amount of pay every month to maintain your consolidation loan in good standing and, if possible, paying a little extra every month in order to pay off the debt more quickly.

Default Penalties

If you find yourself still struggling for whatever reason with your debt consolidation, be sure to speak with the lender about positive options that can help you recover. You may be eligible for a loan deferment or a reduction in your payment amount (a minor refinance) in order to keep yourself on schedule. If your loan consolidation is for Federal loans, you want to avoid defaulting at any cost, because there is essentially no relief from student loan debt until it is paid. Government loans are impervious to bankruptcy rulings, and the IRS can be called in to appropriate any and all tax refunds you receive until the debt is satisfied or even garnish your wages through your employer.

Paying off your loan

The best part of taking out any loan is finally paying it off. This is a goal you should strive for by adding as much to the monthly payment of your loan as your budget will allow for. Even paying an extra $10 per month over the course of a ten year consolidation loan can save you more than a thousand dollars in interest and help you seen your loan paid off a year sooner than expected. If you have an extended loan, such an extra payment amount can save you significantly more time and money in interest payments.