Student Loan consolidation

OK, interest rates are going up soon, and I need to consolidate my student loans. My question is whether or not it matters which company I use. Surely, several of you have experience with this process. Does it matter with whom I consolidate? I want good customer service first and foremost, since the rates won’t vary by that much, as far as I can tell. Is there anything I should know before doing this?

Oh, I should add that I plan to consolidate but still defer the payments, since I won’t get my PhD until December, technically. The reason I should be able to consolidate anyway is because I technically got a masters this past Spring. I don’t know if that is pertinent info, but there it is.

Who did you get your loans through? I got my medical school loans through Sallie Mae (from a variety of sources), and ultimately consolidated them all with them. It as easy as Hell, I did it all online. It will show you what your payment wil be after consolidation and everything. You can make payments at any time, and can set yourself up for automatic withdrawal. And if you ever get into a situation with them, they’re very good about taking late reports off your credit report. Also - and this is from personal experience at this very moment, as I’m purchasing a house - lenders/banks look favorably upon your loan if its consolidated and you’re making a steady, reasonably low monthly payment that can be easily calculated into your estimated monthly bill total and if you’ve been paying on it reliably. It essentially negates that portion of your debt in your debt/income raito.

I’m not specifically sure of the whys (but lack of “customer service,” namely the ease of internet access, is one of them for sure) for not using someone else, but a friend of mine who works for a crediting agency says to avoid all those other ones, the ones that send you offers in the mail (TelNet is one, I think) to consolidate. They work like credit card debt consolidators, and aren’t out to do you any favors.

Are we talking Federal loans here, or private loans? I don’t think that you don’t need to be a new graduate (or even to have graduated at all) to consolidate. There’s some good info here, and also on the US Dept. of Education website.

I did a Direct Consolidation Loan for my Federal loans. You can apply online, which is nice. Setting up payments for direct withdrawal gives you an extra .25% off the interest rate. Get your application in quickly, though, because interest rates go up at the end of this month.

The problem with consolidating your student loans if you haven’t graduated yet is any no-interest/postponed payments period immediately vanishes. My wife was looking to consolidate her loans when she found this out. She elected to wait until the grace period expired, something like 6mo after she graduates.

My girlfriend was reading through the whole process this morning, so its timely to see a thread here on it. The “start paying now” is one of those fine-print things.

There was an article a while ago that we discussed about somebody who had already consolidated her loans…turns out once and done. You can’t re-consolidate.

That story almost made my a liberal.

Good luck man!

:D

Normally that’s not bad advice, but the current situation is that the interest rates are at an all-time low, and are due to increase by a whopping 2 percent–the largest single-year rate increase in the history of the federal loan program–on July 1st. That would nearly double the interest rate on my Federal loans. If you consolidate now, however, you can lock in the current rates (or at least a rate based on the average of all your Federal loans) for the lifetime of the loan. Unless you are abjectly poor and can’t afford to start paying now, waiting (at least right now) is a terrible idea that will end up costing you thousands of dollars. And even if you are abjectly poor, it’s still a terrible idea, because you can consolidate and then apply for a need-based deferment.

Actually you can, as long as you have at least one unconsolidated loan to add to the mix. You can’t reconsolidate an existing consolidation loan (like refinancing a mortgage), though. So in Robert’s case, he can roll any loans he takes out for the fall into his current consolidation loan, and reconsolidate again after he graduates. He won’t want to do that, though, because I think the interest then gets recalculated.

Yes, from my research, all of what Ben says is correct (and thanks for all the help…you, too, Bill). There is actually a loophole, according to one of the sites linked above, that allows you to defer your loans AFTER you consolidate. So you enter an immediate repay period by consolidating, but then all you have to do is get your school to send a deferment form to the company and you are right back on deferment. This does, however (also mentioned above, but perhaps not clearly) mean that immediately upon graduation you must start repaying. You don’t get the 6 month deferment. In my case, this means I have to start repaying in January (one month after my Dec. graduation date) instead of June. But, as Ben says, this is worth it to lock the rate.

My only concern is that the online form (processed through citibank, since they hold most of my loans already anyway) says it will take 6-8 weeks to process. I’ll still get current rates, won’t I?

Yes. The online form just needs to be submitted before the deadline (and if you do it by mail, your application must be postmarked before the deadline). But I’d say that you still want to do it as soon as possible, just to be safe.

As far as the company, I have consolidated 2 types of student loans with 2 different companies, and both loans were sold to 2 new companies (at least once). I don’t think it matters, I just send them my money each month.

Hrmm… as near as I can tell it’s better for me to consolidate my singular loan ($8500 @ 2.77%), bump the interest up by 0.125% or whatever, and start paying now than wait out the next three months of my deferment and get screwed in the long run.

What’s up with a whopping 2% increase in the interest rate, anyway? Difficulties bleeding the nation dry by just putting the thumbscrews to the middle class, so might as well hit the students too?

Student loan interest rates vary with the prime rates. As they go up, the student loan rates follow. There is, however, a max on student loans (8.25 maybe?) but it’s WAY higher than what you are paying now, much less what you could consolidate at.

Normally that’s not bad advice, but the current situation is that the interest rates are at an all-time low, and are due to increase by a whopping 2 percent–the largest single-year rate increase in the history of the federal loan program–on July 1st.[/quote]

The other problem being that she has another 2 years to go on her second masters degree. She finishes the first one next week (yay).

I need to pay more attention. This means that prime jumped 2%? Ouch!

I don’t think so, but student loans rates have been significantly below prime for some time now; I’m no expert, but I think this is some sort of correction.

Normally that’s not bad advice, but the current situation is that the interest rates are at an all-time low, and are due to increase by a whopping 2 percent–the largest single-year rate increase in the history of the federal loan program–on July 1st.[/quote]

The other problem being that she has another 2 years to go on her second masters degree. She finishes the first one next week (yay).[/quote]

Here is the thing. You can consolidate now, based on this degree…and if I understand correctly, consolidate AGAIN after the next one. A friend of mine did this recently (though his was masters to PhD). You can also continue to defer as long as she is in school. Talk to financial aid and get them to give you the full scoop, so you know your options.

Aha… that makes sense I guess. Wonder why they were stuck so low… hrmm…

Still, guess I should consolidate (and pop my interest rate up… heh… too bad I can’t just graduate by July, that’d solve so many problems! :P )

I just applied with Sallie Mae. I’m wondering if I shouldn’t have gone with the Direct Consolidation, now that I think about it, but too late now. Anyway, thanks for bringing this up. I received notification about the rate increase, and promptly forgot about it.