Tilted Forum Project Discussion Community - View Single Post

scarglitter · 06-12-2006, 04:11 PM

Hi there,
This is long (and probably more information than necessary)!

I just consolidated my student loans and did quite a bit of research.
If your loans are Direct Stafford (i.e., through the government/awarded from FAFSA), it may be easiest to go through the Direct Loan Program (www.loanconsolidation.ed.gov). They offer incentives like lower interest rates if you pay your monthly bill on time for 12 months. I have heard stories about some companies selling your loan to other companies, who then raise your rate. Although I have never confirmed it, it is scary enough to convince me that state programs or the federal Direct Loan Program are safer.

You can apply online, or call in. They will just need your social security number, and it also helps to have your loan information (i.e., award papers). The website www.nslds.ed.gov will give you information on every student loan you have. You just need your FAFSA pin to access your records.

However, it sounds like you only have 1 loan (and one upcoming). With one loan, I am not sure consolidation is as necessary/helpful. I also read that consolidation is best if you have more than $5000 in student loans - otherwise, you may be better off just paying it. I do not think you can consolidate loans that have been awarded, but not dispersed - however, not sure on that. Also, your loans should be in the grace period or repayment. Are your loans subsidized?

Here is some information from my school's website:

A Federal Consolidation Loan allows you to combine any eligible loans into one loan with a fixed interest rate. This means you will only have one loan, one lender, and one monthly payment. You can only consolidate once, so please read the following information carefully.

This may be your last opportunity to lock in the lowest rates in the history of the program for the life of your loan.

Factors to consider:

* You may have received offers from many different lenders asking to consolidate your loans with them. While some lenders will offer incentives that can result in a lower rate over time, remember that any Direct Stafford loans you borrowed since fall of 2000 were already given a 1.5% reduction in the origination fees. This rebate is subject to the condition that you make your payments on time during the first 12 months of repayment as well as keep your loans with the Direct Loan Program and not consolidate with another institution. If you consolidate your federal loans with another lender, you will lose that 1.5% interest rebate. This amount will then be added to the principle of your loan. Be sure to discuss this with your lender. We encourage you to be a wise consumer and make the decision that best suits your individual needs.

* Until June 30, 2006, if you apply for loan consolidation and are continuing in school, you will retain your grace period/deferment/forbearance eligibility. After that point, applying for a consolidation loan must be done after you leave school. In addition, interest rates will jump to a fixed 6.8% and consolidation will no longer have a positive impact on your interest rate.

* If you are already out of school, you will begin payment on your loan as soon as it has been fully processed.

* The best time to consolidate for continuing students is before July 1, 2006 when the interest rate(s) on your original loans are at their lowest.
Federal consolidation loan programs are restricted to federal guaranteed educational loans. You cannot consolidate alternative (private) loans under this program.

Hope this helps!!

06-12-2006, 04:11 PM	#3 (permalink)
scarglitter Upright	Hi there, This is long (and probably more information than necessary)! I just consolidated my student loans and did quite a bit of research. If your loans are Direct Stafford (i.e., through the government/awarded from FAFSA), it may be easiest to go through the Direct Loan Program (www.loanconsolidation.ed.gov). They offer incentives like lower interest rates if you pay your monthly bill on time for 12 months. I have heard stories about some companies selling your loan to other companies, who then raise your rate. Although I have never confirmed it, it is scary enough to convince me that state programs or the federal Direct Loan Program are safer. You can apply online, or call in. They will just need your social security number, and it also helps to have your loan information (i.e., award papers). The website www.nslds.ed.gov will give you information on every student loan you have. You just need your FAFSA pin to access your records. However, it sounds like you only have 1 loan (and one upcoming). With one loan, I am not sure consolidation is as necessary/helpful. I also read that consolidation is best if you have more than $5000 in student loans - otherwise, you may be better off just paying it. I do not think you can consolidate loans that have been awarded, but not dispersed - however, not sure on that. Also, your loans should be in the grace period or repayment. Are your loans subsidized? Here is some information from my school's website: A Federal Consolidation Loan allows you to combine any eligible loans into one loan with a fixed interest rate. This means you will only have one loan, one lender, and one monthly payment. You can only consolidate once, so please read the following information carefully. This may be your last opportunity to lock in the lowest rates in the history of the program for the life of your loan. Factors to consider: * You may have received offers from many different lenders asking to consolidate your loans with them. While some lenders will offer incentives that can result in a lower rate over time, remember that any Direct Stafford loans you borrowed since fall of 2000 were already given a 1.5% reduction in the origination fees. This rebate is subject to the condition that you make your payments on time during the first 12 months of repayment as well as keep your loans with the Direct Loan Program and not consolidate with another institution. If you consolidate your federal loans with another lender, you will lose that 1.5% interest rebate. This amount will then be added to the principle of your loan. Be sure to discuss this with your lender. We encourage you to be a wise consumer and make the decision that best suits your individual needs. * Until June 30, 2006, if you apply for loan consolidation and are continuing in school, you will retain your grace period/deferment/forbearance eligibility. After that point, applying for a consolidation loan must be done after you leave school. In addition, interest rates will jump to a fixed 6.8% and consolidation will no longer have a positive impact on your interest rate. * If you are already out of school, you will begin payment on your loan as soon as it has been fully processed. * The best time to consolidate for continuing students is before July 1, 2006 when the interest rate(s) on your original loans are at their lowest. Federal consolidation loan programs are restricted to federal guaranteed educational loans. You cannot consolidate alternative (private) loans under this program. Hope this helps!!