Consolidating student loans?
 

Okay....

I've been getting a massive amount of mail about consolidating student loans. I was wondering about consolidation. All these circulars point out that rates are at an all time low and now is the time.

I only have about $8000 worth of debt and I'm almost out of the grace period. I've left school temporarily, but plan on going back within the next couple of years.

Do I consolidate? What should I be on the look out for when reading these things? Can anyone point me in the right direction or maybe suggest some services?

I'm not real sharp when it comes to matter of finance, so please, speak slowly ;)

First of all, you don't need to do it RIGHT NOW in order to get the current low rates. Interest rates for student loans remain the same for an entire year and every July 1 they are readjusted to the current rate. So as long as you consolidate before July 1, 2005 is doesn't matter when you do it.

As a rule of thumb, if something sounds like a great deal, but they tell me I have to ACT NOW, I generally send that offer straight to the trash can. Any financial decisions should not be rushed. Sure you may miss out on some great deals this way, but you won't get screwed either (and you probably have a much higher chance of getting screwed).

One peice of advice I would give is make sure you consolidate with a reputable company. I would do it with a company that you pick and not one that sends you fliers in the mail. You can't go wrong with Sallie Mae (I'm also considering Iowa student loans for my grad school debt - do a google search on them to find their web site).

Make sure to read the fine print. Make sure that whoever you consolidate with doesn't charge you for paying your debt off early or making payment larger than required. Also look around for deals that take extra percentage off for direct withdrawl from your bank account and for making payments on time.

And finally, remember that you can only consolidate once. That isn't such a big deal now since interest rates are at rock bottom, but I was an idiot and consolidated back in 1999 and am stuck with very high rates for all of my undergraduate debt.

Basically, the bottom line is do your homework and do not make any rush decisions.

I am waiting until I know I won't need any more loans. Because, like hokieian said, you can only consolidate once. I'm hoping that rates won't go up too much before I am done. I am currently working full time and taking night classes so It's taking forever. I would also go with a recognized company, preferrably some company that has a local branch office. I just prefer to deal with people face to face. It's hard enough to tell who is trying to rip you off looking at someone in the eye. The internet is impossible. You can check the company out online at the Better Business Beaureu (sp?), or check with the local/state government agencies to see if any complaints have been made.

btw, you might want to check into this: you can consolidate a particular loan once--not just go through the process once.

That means, consolidate now, then consolidate 5 more loans years later. Perfectly legit. The previously consolidated loans are just fine but a seperate event.

Unless I'm on crack, but my undergrad loans are all consolidated under last years extremely low rates. Also, the place I went through drops another point off after 3 years of payments. Check into special incentives like that, too.


There are a lot of ins and outs to consolidation (like repayment plans, default options, losing certain rates and forgiveness tiers, for example). You might benefit from a visit to your local admin office, mainly because I don't want to dig out my paperwork and type it all out ;) sorry 'bout that.


EDIT: oh what the hell, I'll give some of it a shot from memory:

ok. short of it is, you want to consolidate. That's not an issue in my mind--you can consolidate your later loans again, just not the ones you consolidate now, which isn't an issue because the rates won't ever be lower again in your school lifetime.

But HOW?

ok, so you might have some loans that can be forgiven, say if you are going to be a teacher or nurse or something along the lines listed in your Perkins package. You likely don't want to consolidate those since they won't be able to be forgiven once you do.

Also, your old loans were given to you at, what, 7%? and your newest ones were like 4%? You don't get the rock bottom for all of them--it's a weighted average. So you have to decide whether it's best to go with an overall 5.55% (for example) or, if you only have $2K at 7%, just pay it off and consolidate the 4% straight through. You see how that works? But maybe you have $5K at 7%, so drop the whole whammy in.

You have to sit there and play with the whole thing until you come out with the best option for yourself.


I think what my wife and I did was to NOT consolidate our perkins (5%) because we only had like $2K and they were subsidized while in school (or maybe just low enought principle that it wasn't worth it to raise my overall consolidated rate). Just pay those off quick. I dumped my unsubs into a locked rate, left half of her oldest ones out, added my newest ones together and viola:

approx. $2K at 5% and the rest at 3.5% (hers just dropped to 2.5% after the 36 month deal). My unsubs are sitting at approx 4.75% or something and my newest ones (unconsolidated) are coming in at whatever rate is now.

I only have 2 loans left and moderately low interest rates (like 4.5%). Is it worth consolidating them?

consolidation locks the rate that you agree upon. Since there is no indication rates are going to decrease, but rather increase in the future, you are most likely only going to benefit from consolidation at this point.

Thanks smooth. I'll look into it.

Thanks again, I filled out the paperwork online last night. Took about 15 minutes. I don't like that they extended my loans for 15 years, but I plan on paying them back way early. I went with Sallie Mae.

Be careful, I get those loan consolidation things in the mail and I've seen in the fine print that even though they may get you a lower rate, they try to tack on extra fees and stuff to it which I think is totally bogus.

I'd go through Sallie Mae if at all possible to consolidate your student loans. They are good people, no fine print, and they look out for you.. truuust this.

What kind of fees did Sallie Mae charge to consolidate. I'm in the same boat and am not sure what to do...

im pretty sure there were no fees involved for sallie mae. if there were i didnt catch them.

Yea, but don't you get an additional reduction if you file before your grace period ends? I'm getting a bunch of consolidation stuff too, my grace period expires this month. A lot of it's from the Alumni Association telling me if I file within my grace period i get an additional 0.60% off my rate