Consolidating companies: how do they make a profit or stay in business?

[edm]

Please help to understand what these consolidating companies do?

1-Do they consolidate only if you have 2 or more loans?

2-How can they advertise 2.75 or 3% interest rates when the Student Loans have a higher interest?

3-Are they counting on the average borrower screwing up and then jump the rate?

[LynnInMN]

Please help to understand what these consolidating companies do?

1-Do they consolidate only if you have 2 or more loans?

Nope...you can consolidate 1 loan.

 

2-How can they advertise 2.75 or 3% interest rates when the Student Loans have a higher interest?

 

Technically they advertise rates "as low as". They have to follow the federal consolidation rules that interest rates are set by a formula of weighed average.

 

3-Are they counting on the average borrower screwing up and then jump the rate?

You mean increase the interest rate?? They can't increase the interest rate. They can remove back end perks such as interest rate reductin for autopayments and one time payments, but they cannot increase the base rate.

Edited January 3, 2006 by LynnInMN

[edm]

Thank you very much response. Which companies would consolidate one loan and how would they calulate interest rate? The companioes we tlaked to said they cannot consolidate one loan.

 

 

Please help to understand what these consolidating companies do?

1-Do they consolidate only if you have 2 or more loans?

Nope...you can consolidate 1 loan.

 

2-How can they advertise 2.75 or 3% interest rates when the Student Loans have a higher interest?

 

Technically they advertise rates "as low as". They have to follow the federal consolidation rules that interest rates are set by a formula of weighed average.

 

3-Are they counting on the average borrower screwing up and then jump the rate?

You mean increase the interest rate?? They can't increase the interest rate. They can remove back end perks such as interest rate reductin for autopayments and one time payments, but they cannot increase the base rate.

[LynnInMN]

Thank you very much response. Which companies would consolidate one loan and how would they calulate interest rate? The companioes we tlaked to said they cannot consolidate one loan.

 

They have to follow the federal consolidation rules that interest rates are set by a formula of weighed average of your current loans.

 

 

What companies have you tried, how much do you owe, and who is your loan thru right now???

[edm]

Have only one loan with Gov, graduated, it is current. Any real reason to try to consolidate? Plus doesn't the single loan rule mean that I could only consolidate with Gov and not private?

 

Thank you very much response. Which companies would consolidate one loan and how would they calulate interest rate? The companioes we tlaked to said they cannot consolidate one loan.

 

They have to follow the federal consolidation rules that interest rates are set by a formula of weighed average of your current loans.

 

 

What companies have you tried, how much do you owe, and who is your loan thru right now???

Edited January 10, 2006 by edm

[edm]

Bump-anyone knows these type of info? Thank you in advance.

 

Have only one loan with Gov, graduated, it is current. Any real reason to try to consolidate? Plus doesn't the single loan rule mean that I could only consolidate with Gov and not private?

 

Thank you very much response. Which companies would consolidate one loan and how would they calulate interest rate? The companioes we tlaked to said they cannot consolidate one loan.

 

They have to follow the federal consolidation rules that interest rates are set by a formula of weighed average of your current loans.

 

 

What companies have you tried, how much do you owe, and who is your loan thru right now???

[threeve]

Well, consolidating would get you a fixed interest rate whereas you probably have a variable rate right now. And consolidating usually offers other interest rate incentives if you use automatic EFT payments and such, and sometimes after X number of on time payments.

 

When you say you have a government loan, do you mean you have a Direct loan? If that is the case, then yes, you probably have to consolidate with them, ie a direct consolidation loan. But that would probably still be a good idea to get a fixed rate, because rates are trending upwards.

[whodean]

If the loan is a Stafford subsized loan (NOT A PRIVATE LOAN) and is with DIRECT then you can consolidate it with UHEAA for the best incentive possible as well as a fixed rate.

[edm]

Why are they the best? What are their incentives?

[edm]

It would have been only fair that the persons mentioning UHEAA, disclosed that to be eligible you had to go the school, or lived in UTAH, etc.