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Facts about consolidating student loans

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Americans owed more than $1.3 trillion in student loans at the end of June, more than two and a half times what they owed a decade earlier.The increase has come as historically high shares of young adults in the United States go to college and the cost of higher education increases.

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About two-thirds of young college graduates with student loans (65%) live in families earning at least $50,000, compared with 40% of those without a bachelor’s degree.Of those with a postgraduate degree and outstanding debt, 23% reported owing $100,000 or more.Young college graduates with student loans are more likely than those without loans to have a second job and to report struggling financially.Roughly one-in-five adults ages 30 to 44 (22%) have student loan debt, as do 4% of those 45 and older.While age differences may partly reflect the fact that older adults have had more time to repay their loans, other research has found that young adults are also more likely now than in the past to take out loans to pay for their education.However, they are still less likely to earn this level of family income than young college graduates without outstanding student loans (77%).

(Family income captures more than just an individual’s personal returns from higher education, including the fact that college graduates are more likely to marry.) About three-in-ten young adults without a bachelor’s degree (31%) live in families earning less than $25,000, compared with 8% of young college graduates with student loans.

(This includes those with loans currently in deferment or forbearance, but excludes credit card debt and home and other loans taken out for education.) Looking only at young adults with a bachelor’s degree or more education, the share with outstanding student debt rises to 53%.

Student debt is less common among older age groups.

The median borrower with outstanding student loan debt for his or her own education owed $17,000 in 2016. A quarter of borrowers with outstanding debt reported owing $7,000 or less, while another quarter owed $43,000 or more.

Educational attainment helps explain this variation. Among borrowers of all ages with outstanding student loan debt, the median self-reported amount owed among those with less than a bachelor’s degree was $10,000.

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.