Now that you've graduated from college and that internship is just around the corner, whether you want to or not you're going to need to start planning out your life. Many young people don't have very much credit built up, so it's hard to get your own apartment or even buy a car. One of the best things that you can do for yourself is to pay off your student loans. Not only will you have less to worry about, but you'll also have a much higher credit rating and life down the road will be much clearer.



Why consolidate your loans?

One of the first things you should look into is loan consolidation. Many people accumulate multiple loans throughout their college years, usually all for different amounts and interest rates. Consolidation will help you pay off your loans by combining them all with one, lower interest rate. It's really not as scary as it sounds, either.

How to Consolidate

There are actually several different methods to consolidation: with a home equity loan, a credit card, or another student loan. Consolidating with a home loan is a good starting option because most home loans have a fixed interest rate. Be warned, though, that if you miss a payment, you risk foreclosure on your house! Now, if you don't own a home yet, but you already have good credit, then taking out a credit card (with 0% APR) might be a smart idea. You'll probably be able to save quite a bit on your interest. Finally, if you're like most people and don't own a home or have much of a credit score yet, then your only option is another student loan.

Warnings

Consolidation can help many people, but you better make sure you do your homework first. If you have low interest rate loans already, then consolidation might not help you very much. Another warning is loan deferment. If you consolidate, in some instances, you might disqualify yourself from taking out any more loans until your consolidated loan is paid off. Lastly, if you have a Perkins loan, you'll lose the option to cancel if you choose to consolidate. More often than not, though, the advantages will outweigh the disadvantages.

Do the Math

There are plenty of free student loan calculators to help you decide if consolidation is right for you. Statistically, student loan consolidation has, in the past, been able to cut loan payments by as much as half. Depending on the type of loan, the lending company, and the combined interest rates of your loans, consolidation might not always be the best choice.

It's not at all as scary as it sounds. Consolidation is simply a more colorful word for ?combine.? So, if you're wondering how you're going to pay for that new car, go to graduate school, and still have money left over to go out to dinner on occasion, then take a look at combining your loans.