By 
In an article published in December 2011 in the financial portal ‘Business Insider’, some real-life stories of people who took out loans for their education were illustrated.
These student debt stories give a clear picture of how borrowers are struggling to shake off the overwhelming burden of student loans.
All these cases show various situations faced by the student community that stress them financially.
A summary of some stories on the website are:
Box 1:
A borrower took out a loan to study game art and design and ended up $100,000 in debt.
Box 2:
This person’s original loan amount was $80,000 which increased to a whopping $135,000!
Box 3:
A loan was taken from a leading bank in 2005 and payment terms could not be negotiated. Even after the borrower’s repeated request for negotiation, the loan was sent to one of the bank’s collection agencies.
Many readers can easily identify with the three instances mentioned above. These are some of the common scenarios borrowers face due to job loss, bankruptcy, or high medical bills. These cases create obstacles for people, making it difficult for them to pay their debts and get rid of their financial responsibility.
Other Factors That Cause Student Debt
Aside from current financial conditions, there are other factors that can cause student debt. It could be due to multiple loans along with variable interest rates coming up, interest compounding, or interest-only payment options. Over time they accumulate in a large amount.
There are many borrowers who have not defaulted on their credit card debt, either through loans or mortgages. They even have a good credit score. However, due to the reasons mentioned above, they can never pay off their student loans.
One of the best solutions these borrowers have to get relief from their debt is to consolidate their various loans into a single loan amount. This way, they only need to make a single monthly payment at a revised interest rate.
How to consolidate student loans
A borrower who can’t pay his student debt can consolidate multiple loans through federal direct consolidation programs and regain control of his financial situation.
When consolidating loans, borrowers should not combine their federal loans with their private ones. The Department of Education does not allow private loan consolidation.
Federal student debt relief services are a great way to get the most out of federal loans. Student debt relief consultants provide a suitable solution as they have the experience to match each loan with eligible repayment plans.
Some leading companies offer comprehensive assistance and guidance to borrowers for a reasonable one-time fee. In this way, they can find a solution without problems and have peace of mind.
Student Loan Consolidation Plans
Income Based Payment Plan
Unlike traditional lending practices, the only factors involved in determining a borrower’s monthly payment are annual adjusted gross income and family size. Credit score and loan amount are not taken into account.
Only loans available under the Federal Family Education Loan (FFEL) Program and the William D. Ford Federal Direct Loan Program qualify for an Income-Based Repayment Plan.
Income Contingent Reimbursement
This plan is designed for those who are not eligible for IBR or Pay as You Earn plans. Direct Subsidized, Unsubsidized, Direct PLUS Loans, and Direct Consolidation Loans qualify for this plan.
Standard payment plan
Through this plan, student debts can be paid in the shortest possible time. Requires a fixed monthly payment for a period of up to 25 years.
Graduated Payment Plan
Under this program, the initial monthly payments are low. Thereafter, the payment amount will increase by 4.25 percent (approx.) each year.
In addition to consolidation, another quick way to eliminate all of your student loans is to qualify for a loan forgiveness program.