Could student loan consolidation work for you?

You've finished your tertiary education. If your lucky you'll walk straight into your first full time job. Settling in to that first full year of school can be tough, but trust me, that first year will be tougher if you've got the debt collector breathing down your next because you've ignored the last dozen student loan repayment notices! Unless you come from a privileged back ground, a student loan (or HECS debt in Australia) is a necessary evil if you want to complete a tertiary degree. You may even have loans from more than one lender, the banks, different colleges or universities and even the government.

How does student loan consolidation work? In the US, a consolidation loan allows you to combine your student loans into a single loan with one monthly payment, which can be lower than the payment required under most standard 10-year repayment options.  The consolidation loan interest rate is set as the weighted average of the interest rates of the loans being consolidated (rounded up to the next 1/8%) and is fixed for the life of the loan.

A student loan is a better option than racking up credit card debt, but either way, you'll still be paying interest. There are a lot of places that offer student loan consolidation services. This trend seems to be most prevalent in the US, but on paper at least, it makes sense. The trick is to try and pay the least amount of interest possible and that's where the loan consolidation can help.

If you racked up bucket loads of student debt during your studies, some kind of consolidation program may be worth looking into. As with anything financial, it's probably best to check with an accountant to see what will best work for you.