How to Consolidate Student Loan Debt

Student loan debt consolidation can begin even before you graduate from college. If possible, take a day job during school (or during vacations from school), so you can begin to generate the capital you need to eat into your student loans. In addition, look for financing arrangements that allow you to pay out a portion of your gross income (over a period of five to ten years) to finance your education. This way, your payback plan will be somewhat concomitant and harmonious with your income situation upon graduation.

The key to effective student loan debt consolidation, of course, is savvy budgeting. Pay your bills on time, limit your use of credit cards, and ask for financial help from other sources to reduce the burdens on your future earning years. If your parents or guardians do not have money available to finance your education, you can look to private investors to take care of at least some of the burden in exchange of a percentage of equity in your earnings (as discussed above).

All this said, you want to maintain some credit to your name, so you can begin to build a reputation with the bureaus as a trustworthy borrower to qualify for low interest credit cards and other loans and leases.

In addition to actively taking steps to student loan debt consolidation, acquire health insurance as soon as possible. If you are young and healthy, you might opt for high deductible insurance in coordination with a health savings plan to cover emergency contingencies. This way, you won't have to pay out of pocket for hospital visits, and you can reduce a means of uncertainty in your life. If you're still in school, try to graduate within four years to avoid taking on more debt.

Student loan debt consolidation tacticians often need to remind borrowers that student loans cannot be expunged -- even during bankruptcy (except under truly extraordinary conditions). In other words, once you take out student loans and spend the money, they are yours to manage, for a lifetime or until they're paid off.

If you are running really short on cash, you may be able to defer or forbear some loan payments, but be aware that your options in terms of “kicking the can” with respect to your student loan debt consolidation plan are limited. Another tactic might be to consolidate your other bills onto a debt consolidation loan, thus freeing up money in your budget to pay for your standard student loan monthly charges.