Loan Consolidation Can be a Smart Move for Current Students

By Dan O'Keeffe and Amanda Stout

01/18/2006

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Wittenberg University's Kristyn Russell is not going to wait for student loan debt to overwhelm her or even hang over her head for a second. Much like in the rest of her very busy life, Russell took charge and made the financially responsible decision to consolidate her loans early and lower the amount she'll have to repay.

Just like many graduating seniors, Russell would have been faced with the huge task of repaying the $17,000 in loans she has accrued during her time at Wittenberg in Springfield, Ohio. According to the 2003-2004 National Post-Secondary Financial Aid Study, two-thirds (65.6%) of undergraduate students graduate with some student loan debt, and the average federal student loan debt among graduating seniors is $19,202 (Stafford and Perkins Loans). Most students are not well-educated on the facts about consolidating loans, such as getting and retaining a fixed interest rate, extending the life of their loans and lowering their monthly payments.

Russell had the advantage of working as an intern her past two summers at Knowledge Works Foundation, the parent organization of Student Lending Works (SLW), a student loan consolidation group. She learned about the benefits a non-profit student loan lender such as SLW can offer a student such as she, even before her May 2006 graduation date. She is currently consolidating loans while still in college because, "I don't want to be paying off loans the rest of my life," says Russell. "I don't want that cloud to be hanging over my head."

Another benefit of consolidating now is avoiding the interest rate hike the federal government is imposing on student loans. The rates went up once this past July, and analysts are predicting another increase in July of 2006.

Loan consolidation has helped Russell lighten the load on her already encumbered shoulders. This bright, athletic college senior has other things to worry about, including her position as the secretary of the Student Senate at Wittenberg and her role as president of the Tiger Pride, an athletic spirit club. And that's not all; Russell also holds positions on the executive boards for her school's Student Education Association and the Honor Council. In addition to those commitments, she is heavily involved with Greek life and serves on the Panhellenic Council.

Somehow, Russell still finds time to spend with her many diverse groups of friends and to pursue her passion for tennis, which she's been involved in since the age of 11. She has big plans for her future as well; and she would like to use her degree in math and science education to teach sixth grade and make efforts to change what she believes is a "flawed American educational system." Over the next 10 to 15 years, she would like to see education reforms made throughout the United States and hopes to be a part of that as either a teacher or an administrator within a school or a school system. She also wants to find time to pursue her masters' degree.

With all of her big plans, on top of impending financial decisions and obligations like rent, utilities, car payments, and beginning savings, Russell won't have to worry about how to make her loan payments. Motivated students such as she have taken steps to avoid crippling debt and the dangers of defaulting on student loans.

Russell is now free to pursue her dreams without a dark cloud hanging over her head. If all goes as planned, she would like to pay off her loans within their first 10 years, or ideally in six or seven years. Who knows, we may see Russell realize her dream of becoming the first female president of the United States someday. Or maybe she'll decide on becoming the nation's first female chairperson of the Federal Reserve.

Editor's note: As with most subjects it is wise to obtain as much information as possible, prior to going forward. Here are three good sources of information regarding the student loan consolidation process:

College Loan Corporation
(800) 692-6121

U.S. Department of Education
(800) 433-3243