Chances are, when you were first applying for student loans and receiving them, you were just so happy to get the money to continue your education; you didn’t really grasp the long term ramifications of having to pay them back.

Oh, you knew that someday you would have to, but knowing that you’d have to deal with something sometime in the future, and having to deal with it now are two very different animals.

If you are now at the point where you need to start relieving yourself of the burden of your debt, it’s like a black cloud of uncertainty hanging over your head.  Will you be able to pay it back?  Are you making enough of an income to cover your monthly repayments?

Student loan refinancing can be a practical step to take, especially if your loan payments are going to make it nearly impossible for you to eat and pay your other expenses.  However, before you move forward, it’s imperative that you understand the pros and cons of student loan refinancing.

First of all, in restructuring or refinancing your student loans, you’ll be combining everything into one new loan.  The lower interest rate that you should end up paying will mean saving hundreds, maybe even thousands of dollars over the life of your student loans.

If you find that you are falling behind on your payments because what you owe monthly is just too hard for you to meet, refinancing your loan is the smart thing to do.  But you need to realize that by lowering your monthly payments, you are actually extending the life of your loan.  So, even though you should be saving money with the refinance, you’re going to have that debt hanging over your head even longer.

So, before moving forward, make sure you consider all of your options, and decide what you can live with.  Unfortunately, none of us can forecast with complete accuracy where our lives will be years from now.  Sometimes it’s better to err on the side of caution.

Do you best to pay off your student loans as quickly as possible, but if your current financial burden is impossible to carry, think carefully about student loan refinancing.

Having said that, you need to know that there are advantages and disadvantages to bad credit student loans.

For one thing, since the lender already knows going into the deal that your credit standing is in a position where regular banks would disqualify you, it’s unlikely – but still possible – that they will run a credit check on you.  And that could spare you just a little bit of discomfort and embarrassment while applying for college student loans with bad credit.

What about collateral?  Will you have to put something up?  This will depend upon the lender.  Some may insist that you put up something as collateral against your loan, and others may not.  If you are in a position where you and/or your family has nothing to use as collateral to finance your studies, then you will need to do your due diligence in order to discover those companies that do not demand it.

Another thing that you need to be aware of is the cost to borrow bad credit student loans.  While there may be very attractive interest rates offer to those students with a good credit score, and clean credit history, you will not be eligible for them.  In fact, since you are considered a poor credit risk, your interest rates may be quite high.  The higher the chance that you will default on your loan, the higher the interest rate charged.  And the amount will be compounded.

This means that if you fail to repay your loan on time, the amount of interest you have due will now be added to your principle, and interest charged on that.  Add to that the penalties you will likely be charged.  So before you know it

So, while it is actually quite is to get college student loans with bad credit, there is a downside.  Just make sure that if you are planning to go ahead and borrow, only borrow exactly what you absolutely need, and make sure you pay it off in time.

Granted, there are valid reasons why it might take up to six years, but have you thought about cutting it down to four?  Think of how much you could save by trimming those two years of college.

Be warned though, this would not be for the faint of heart, or those that lack self-control.  Finishing college in four years means you need to focus on your education and not the social aspects of being in school.  Sure, you might miss out on a lot of fun, but the memories of that fun may lose there luster ten or fifteen years later when you’re still burdened with student debt.

What is it they say again?  Oh, yeah.  Hindsight is twenty-twenty.

Knowledge is power.  Use it wisely…

“Yay!”  you say.  Well, before you launch into a happy dance, consider the pros and cons.

The Pro:  If you have a good repayment history, that won’t change with the plan.  Even if you take a lowing paying job that makes meeting your student loan payments more difficult, if not impossible.

The Con:  Typically, it takes 10 years to pay off your student loan.  If you go with the new plan, you could be paying your loan back for a lot longer.  And in that time, your interest continues to grow.  And even if the government forgives the loan, the IRS may not be so forgiving.  What does that mean?  It means they could apply the forgiven amount to your taxable income.

Talk about damned if you do; damned if you don’t!

Food for thought…