Paul, 45 and Cheri, 43 where concerned about their daughter Amy’s debt burden. Amy’s college education had to be funded out of Federal and Private Student Loan options. In spite of their efforts to get the best possible finance option, rising interest rates had a toll on the finances of Amy and her family. Nearing completion of her graduation, repayment of Student Loans was soon to begin. The challenge is all about managing debt repayment.

Paul, 45 and Cheri, 43 where concerned about their daughter Amy’s debt burden. Amy’s college education had to be funded out of Federal and Private Student Loan options. In spite of their efforts to get the best possible finance option, rising interest rates had a toll on the finances of Amy and her family. Nearing completion of her graduation, repayment of Student Loans was soon to begin. The challenge is all about managing debt repayment.

Rising student loan interest rates

She is confident about earning a minimum of $1,500 every month initially. Preparing for her repayment liability, Amy was shocked to know the huge liability ahead of her. Federal Stafford Loans were at 6.8% and private loans offered at 7% now stand at14%. The unfavorable credit situation, has given rise to this huge borrowing cost causing the financial hardship to both students and their parents who have borrowed money to fund their education.

However, the best option in such a case is to not despair but plan beforehand. If Amy had borrowed her loans expecting such unfortunate situations like these, then she would have been better off. But, it is better late than never. At least now, Amy should make plans on how to meet her Student Loans best.

Student Loan Consolidation as an Option

Consolidation can offer her a temporary relief in postponing her repayment period and reducing the financial hassles of managing too many loans. Also, it can save Amy from defaulting on her loan by greatly reducing the monthly installments to be repaid. Also, Amy does have the option to consolidate her federal and private loans together. The benefits of consolidation are definitely not going to relieve her of her liabilities; they only get postponed with a little savings in interest rates.

Support from Government

Government has taken measures to save students from the real financial crunch they are facing. Federal Student Loan limits have been raised by $2,000 per year. The late payment requirement for mortgage payments and medical bills has been extended to 180 days from the current 90 days limit, thereby easing the financial crunch.

Parents of student are now allowed to defer their PLUS loan repayment after their children complete their graduation. Previously they had to start repaying within two months from the date of disbursement of money. Hope the Government’s initiative in reducing the financial burden of students enables them to pursue education in time and with less financial hassles.