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Consolidate Student Loans:

Given the fact the government offer index linked loans I was surprised to see a growing number of companies offering to consolidate student loans.

I do not know what the average level of debt incurred by students is currently, last time I looked it was around £20,000 which is a lot of money

That said, given the government currently offer student loans to a value of £27,000 over three years there would, even with this level of student debt be no reason to consolidate student loans, which makes me wonder, if £20,000 is an average level of student debt, what must the most indebted students owe, and how old will they be before repaying it?

When I have borrowed money I have used 0% deals on credit cards, transferring onto antoher 0% interest deal before I have to pay interest. I have never paid an arrangement fee for doing this (which I recently read is a catch with some transfers).
As long as you are careful to keep moving your debt before paying interest this can work. The danger is that you end up with a pocket full of cards and a massive collective credit limit. For this reason it is best to cut up and cancel each card as you finish with it.

Credit card companies are not stupid, whilst some manage to play them at their own game, most borrowers go on to spend more money on their cards and pay interest….

In terms of consolidating student loans there is not much information available as to the number of students that actually do this, however, with over 6 million enquiries to the Citizens Advice Bureau each year regarding debt consolidation, there are sure to be some students in there somewhere!

Another worrying statistic I read recently was that the majority of people who take out consolidation loans go on to take on more debt, I believe this number was as high as 75%.

There is no point in trying to consolidate student loans if you are just going to carry on spending. Only consolidate student loans if you are serious about paying them off.

Debt consolidation and re-borrowing are a recipe for disaster.

Your bank manager is NOT the first person you should speak to as their objective will be to ensure you consolidate student loans with them!!

Also, banks have an unpleasant tendency to sell financial products that are “not fit for purpose”, or, products they know you can not really get full benefit from.

If you are considering consolidating student loans get some independent advice!

Be cautious about trusting the Students Union also. Over the last few years Unions in general have profited by marketing products offered at “special rates” to their membership. It is rare to find anything “special” with these “special” rates!

In my opinion the Citizens Advice Bureau would be a good place to start. They will offer objective advice and will hopefully be able to guide you in the right (un-biased) direction.

If you are planning to spend a few years travelling and have no need of banks or mortgages for a few years, rather than consolidating your students loans, consider declaring yourself bankrupt instead!!!

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