For most people, the reason to do this is to either (A) lower their interest rate, (B) get a lower monthly payment, or (C) make it easier to organize their debt in one place.
While debt consolidation is similar to debt management in certain ways and some of the reasons for each one are similar, they are in fact two different things.
However, if your choice lies between consolidating existing loans while paying more interest over time and falling behind in your individual loan payments, you should take the consolidation loan.
As you see, deciding whether consolidation is the right course for you depends not only on your current situation but also on the terms of the new loan. Department of Education (USDOE) has established a well-documented system of rules for federal student loan consolidation, and each private lender has its own guidelines for acceptable consolidation plans.
Let’s be more practical today and learn some advanced accounting techniques.
Debt consolidation involves taking out new credit to pay off your debts and debt management is where you negotiate affordable payments with the companies you currently owe money to.You’ll have an opportunity to add financial details from other sources to the data used by FACT.The government has a strong interest in making it possible for students to pay off their educational loans, and at the end of 2012 it instituted a new form of the income-based repayment plan called Pay As You Earn (PAYE).Both can lead to lowering payments but are completely different ways of dealing with debt.If you're not sure which option suits your circumstances then we can help.