Loan Consolidation? - Tilted Forum Project Discussion Community

asaris · 06-12-2006, 02:04 PM

I seem to remember seeing a thread about this hereabouts, but can't seem to find it. I'm increasingly being convinced that, despite only one year of school loans, I should try and consolidate them. But what I want to know is:

1. Are some companies better than others?

2. What information are they going to want when I call in?

3. Can they include the loans I've already been approved for (for next year), but haven't been dispersed yet?

Any advice you can give would be appreciated.

vanblah · 06-12-2006, 02:29 PM

I'm hardly an expert in this but from what I can tell the interest rates are higher for most loans than for student loans.

If the interest rate is lower then make sure that you're not paying longer terms which in the end will cost you more money.

The rule of thumb I use when considering a loan consolidation is "No one is doing you any favors."

If you simply can't afford your monthly payment then a consolidation might be a good idea. If you CAN afford it then just stick with what you're doing.

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!!

asaris · 06-12-2006, 07:44 PM

It helps, but a bit more information might help you help me. I'm not out of school yet. I have a year's worth of loans (over $5,000), but have two more years of loans to go before I'm done taking out these loans. I'm just really not financially savvy. One question might be, I've always assumed that I could pay off loans faster than whatever payment might be assigned me. Do they in fact limit payments? To take an extreme example, if I inherited 2 million dollars, couldn't I just pay my loans off right away?

FlatLand Flyer · 06-12-2006, 11:07 PM

Quote:

Originally Posted by asaris

It helps, but a bit more information might help you help me. I'm not out of school yet. I have a year's worth of loans (over $5,000), but have two more years of loans to go before I'm done taking out these loans. I'm just really not financially savvy. One question might be, I've always assumed that I could pay off loans faster than whatever payment might be assigned me. Do they in fact limit payments? To take an extreme example, if I inherited 2 million dollars, couldn't I just pay my loans off right away?

I don't recommend consolidating now. You still have school left and, generally, if you consolidate, you will have to start paying them off in 6 months. If you can afford to do this, go ahead. However if you can pay them now, why even take out the loan?

It depends on the company, but most companies do not penalize you for early repayment.

keyshawn · 06-15-2006, 10:51 AM

hey,

I'm going through the process right now and did some research on it and pretty much:
If you have a Stafford Loan: CONSOLIDATE THE LOAN !

(I'm presuming you have a Stafford, PLUS, or Perkins Loan; the most popular and ones offered by the government). If you have a loan you took out from a private company like citibank, then skip near the end, about the college fin aid office.

For Stafford, I'm almost positive that you do not lose the grace period for it. I do remember that for Perkins Loans (another type of govt loan), if you consolidated it, you'll lose the ability to write it off if you partcipate in a program like the Peace Corps or Americorps, or teach in a city school after you graduate.

To answer another question, they cannot 'limit' your payments. If you do win the lottery tomorrow or receive a huge windfall (though let's not kid ourselves, it's probably not going to happen); you're better off taking that money for a year and a half before you graduate, putting it in a short term investment like a CD (gaining interest) rather than paying before you leave college (because for Stafford, you don't have to pay the interest that accrues while you're in school if you make your first 12 payments, after you leave college).

I seriously recommend you to call the financial aid office at your college. They're still there in the summer (may have shorter hours) and will help you out and answer any questions you have. They'll give you good advice and are an underutilized resource !
(I'm not connected to my college's fin aid office, other than the fact they've helped me out w/ advice and not enough students know they can get free help and advice from them.)

For #1, I wouldn't trust any company that isn't well known. Go with a company that's owned by the government -

HTML Code:

<ahref="http://dlssonline.com">direct loans</a>

or Sallie Mae [used to be a govt entity, recently privitized].

catcha back on the flipside,
keyshawn

Supple Cow · 06-15-2006, 11:48 AM

While we're on the subject, does anybody know anything about consolidating private (as in non-federal) student loans? None of the trusted places I'm looking do student loan consolidation for non-federal loans, not even my own lender.

NoSoup · 06-15-2006, 12:47 PM

Quote:

Originally Posted by Supple Cow

While we're on the subject, does anybody know anything about consolidating private (as in non-federal) student loans? None of the trusted places I'm looking do student loan consolidation for non-federal loans, not even my own lender.

I'm not sure if this will help or not or just be a dead end, but I believe I saw a commercial for JP Morgan Chase regarding consolidating student loans.

Hopefully that's helpful...

FlatLand Flyer · 06-16-2006, 11:02 PM

Quote:

Originally Posted by Supple Cow

While we're on the subject, does anybody know anything about consolidating private (as in non-federal) student loans? None of the trusted places I'm looking do student loan consolidation for non-federal loans, not even my own lender.

I have a boat load of private loans and they were bought from my lending institution by SLFC (Student Loan Finance Corp.). They were bought pretty much instantly from US Bank when I took out the loans. Once I was done with college, I called them and they consolidated them all.

I have no idea if this helps you. This is just what happened with me.

Lady Sage · 06-19-2006, 06:06 PM

I answered in a thread similar to this a month or so ago... I think if you search my previous posts or scroll down through the threads you will find it. I hope it helps!

Ha! Found it!!!

Hello, I have worked in banking for over 5 years, perhaps I may be of assistance. Every bank/mortgage broker is different, shop around! Credit is what makes or breaks you as most places have a plan that will match your down payment up to X dollar amount. Here are some questions to ask that are very important. What is my pre payment penalty? What are my ap fees? What are my title search fees and fees in general? How much will my closing costs be? Will i have to deal with PMI? What is the best plan for me? (fixed/variable/ARM) I personally suggest a fixed rate as rates are on the rise and arms also deal with periodic variable rates. I hope this helped you some.

NoSoup · 06-19-2006, 11:06 PM

Quote:

Originally Posted by Lady Sage

I answered in a thread similar to this a month or so ago... I think if you search my previous posts or scroll down through the threads you will find it. I hope it helps!

Ha! Found it!!!

Hello, I have worked in banking for over 5 years, perhaps I may be of assistance. Every bank/mortgage broker is different, shop around! Credit is what makes or breaks you as most places have a plan that will match your down payment up to X dollar amount. Here are some questions to ask that are very important. What is my pre payment penalty? What are my ap fees? What are my title search fees and fees in general? How much will my closing costs be? Will i have to deal with PMI? What is the best plan for me? (fixed/variable/ARM) I personally suggest a fixed rate as rates are on the rise and arms also deal with periodic variable rates. I hope this helped you some.

Good advice, but it probably won't help too much with educational loans

06-12-2006, 02:04 PM	#1 (permalink)
asaris Mad Philosopher Location: Washington, DC	Loan Consolidation? I seem to remember seeing a thread about this hereabouts, but can't seem to find it. I'm increasingly being convinced that, despite only one year of school loans, I should try and consolidate them. But what I want to know is: 1. Are some companies better than others? 2. What information are they going to want when I call in? 3. Can they include the loans I've already been approved for (for next year), but haven't been dispersed yet? Any advice you can give would be appreciated. __________________ "Die Deutschen meinen, daß die Kraft sich in Härte und Grausamkeit offenbaren müsse, sie unterwerfen sich dann gerne und mit Bewunderung:[...]. Daß es Kraft giebt in der Milde und Stille, das glauben sie nicht leicht." "The Germans believe that power must reveal itself in hardness and cruelty and then submit themselves gladly and with admiration[...]. They do not believe readily that there is power in meekness and calm." -- Friedrich Nietzsche

06-12-2006, 07:44 PM	#4 (permalink)
asaris Mad Philosopher Location: Washington, DC	It helps, but a bit more information might help you help me. I'm not out of school yet. I have a year's worth of loans (over $5,000), but have two more years of loans to go before I'm done taking out these loans. I'm just really not financially savvy. One question might be, I've always assumed that I could pay off loans faster than whatever payment might be assigned me. Do they in fact limit payments? To take an extreme example, if I inherited 2 million dollars, couldn't I just pay my loans off right away? __________________ "Die Deutschen meinen, daß die Kraft sich in Härte und Grausamkeit offenbaren müsse, sie unterwerfen sich dann gerne und mit Bewunderung:[...]. Daß es Kraft giebt in der Milde und Stille, das glauben sie nicht leicht." "The Germans believe that power must reveal itself in hardness and cruelty and then submit themselves gladly and with admiration[...]. They do not believe readily that there is power in meekness and calm." -- Friedrich Nietzsche

06-15-2006, 10:51 AM	#6 (permalink)
keyshawn Psycho	hey, I'm going through the process right now and did some research on it and pretty much: If you have a Stafford Loan: CONSOLIDATE THE LOAN ! (I'm presuming you have a Stafford, PLUS, or Perkins Loan; the most popular and ones offered by the government). If you have a loan you took out from a private company like citibank, then skip near the end, about the college fin aid office. For Stafford, I'm almost positive that you do not lose the grace period for it. I do remember that for Perkins Loans (another type of govt loan), if you consolidated it, you'll lose the ability to write it off if you partcipate in a program like the Peace Corps or Americorps, or teach in a city school after you graduate. To answer another question, they cannot 'limit' your payments. If you do win the lottery tomorrow or receive a huge windfall (though let's not kid ourselves, it's probably not going to happen); you're better off taking that money for a year and a half before you graduate, putting it in a short term investment like a CD (gaining interest) rather than paying before you leave college (because for Stafford, you don't have to pay the interest that accrues while you're in school if you make your first 12 payments, after you leave college). I seriously recommend you to call the financial aid office at your college. They're still there in the summer (may have shorter hours) and will help you out and answer any questions you have. They'll give you good advice and are an underutilized resource ! (I'm not connected to my college's fin aid office, other than the fact they've helped me out w/ advice and not enough students know they can get free help and advice from them.) For #1, I wouldn't trust any company that isn't well known. Go with a company that's owned by the government - HTML Code: <ahref="http://dlssonline.com">direct loans</a> or Sallie Mae [used to be a govt entity, recently privitized]. catcha back on the flipside, keyshawn __________________ currently reading: currently playing :

06-15-2006, 11:48 AM	#7 (permalink)
Supple Cow Americow, the Beautiful Location: Washington, D.C.	While we're on the subject, does anybody know anything about consolidating private (as in non-federal) student loans? None of the trusted places I'm looking do student loan consolidation for non-federal loans, not even my own lender. __________________ "I've missed more than 9000 shots in my career. I've lost almost 300 games. Twenty-six times I've been trusted to take the game winning shot and missed. I've failed over and over and over again in my life. And that is why I succeed." (Michael Jordan)

06-12-2006, 02:29 PM	#2 (permalink)
vanblah Junkie	I'm hardly an expert in this but from what I can tell the interest rates are higher for most loans than for student loans. If the interest rate is lower then make sure that you're not paying longer terms which in the end will cost you more money. The rule of thumb I use when considering a loan consolidation is "No one is doing you any favors." If you simply can't afford your monthly payment then a consolidation might be a good idea. If you CAN afford it then just stick with what you're doing.

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!!

06-19-2006, 06:06 PM	#10 (permalink)
Lady Sage Mistress of Mayhem Location: Canton, Ohio	I answered in a thread similar to this a month or so ago... I think if you search my previous posts or scroll down through the threads you will find it. I hope it helps! Ha! Found it!!! Hello, I have worked in banking for over 5 years, perhaps I may be of assistance. Every bank/mortgage broker is different, shop around! Credit is what makes or breaks you as most places have a plan that will match your down payment up to X dollar amount. Here are some questions to ask that are very important. What is my pre payment penalty? What are my ap fees? What are my title search fees and fees in general? How much will my closing costs be? Will i have to deal with PMI? What is the best plan for me? (fixed/variable/ARM) I personally suggest a fixed rate as rates are on the rise and arms also deal with periodic variable rates. I hope this helped you some.