Debt
Consolidation Options
If you have student loans and are planning on taking out a
debt consolation, you might want to act more sooner than
later. We recently reported that debt consolidation for
student loans is a great way to take care of the numerous
payments that you have to juggle on a monthly basis.
However, it would seem that the number of defaults on
student loans has increased, so the choices that were once
plentiful have shrunk.
Many lenders have taken debt consolidation all but off the
table, making it hard for students to get a handle on their
finances after graduating college. Many lenders suspended
debt consolidations all together, leaving the US Department
of Education the nation’s top debt consolidation avenue.
The Pennsylvania Higher Education Assistance Agency, also
known as PHEAA, had suspended their debt consolidations in
February. Sallie Mae, Nelnet, Next Student – they all did so
shortly thereafter. Of the top 100 debt consolidators, only
22 are still allowing them to be processed – while all of
the others have suspended their options.
Debt consolidation experts say that the suspensions
accelerated as soon as the federal government cut lender
subsidies on federal loans. This left the banks making
little to no money off of the debt consolidation loans.
Now, the Dept. of Ed has seen a large number of debt
consolidation applications – in fact it is up more than 50%
over the previous year. Students that are looking for the
old debt consolidation rates of 2.8% and up are going to be
disappointed to find that those rates don’t really exist any
longer.
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