Consolidation Question

[mylittlelo]

Hello,

 

I have a question regarding possible consolidation. I have a loan from my university that is in default for about $3k. I currently have loans through the DOE in rehab (have paid 4 out of 12-15 months). First, is consolidation dependant on my credit score? I need to get ahold of my school to get the $3k loan in rehab. Can I consolidate just one loan with a 3rd party? Will I get a bad rate if I have a low credit score? I want to finish the DOE rehab in order to clear up my credit report, but then I'll be stuck at a high interest rate.

 

I guess I am just looking for some advice on what I should do...

 

Thanks!!!

[mylittlelo]

OK, so one of my questions was answered last night in another thread. I understand that credit does not affect the decision for consolidating my loans.

 

Is the cost savings by consolidating going to outweigh getting the negatives deleted from my credit report through rehabilitating the loan/s? I don’t even know what interest rate I am paying now… When I am done with rehabbing my Direct Loans, I think my balance will be around 7k. I thought I was told some of the collection costs be removed after rehab, but I’m not sure about that.

 

Sorry, I’m just talking this through. If anyone can help me with how to best make this decision, I would appreciate it!!

[mylittlelo]

How do I find out what interest rate I'm paying on my loans? I have a Direct Loan and a Perkins Loan, and I received the loans from 1995-1999.

 

...Still trying to weigh consolidation vs. rehab

 

Thanks!

[ziggypop]

Hello,

 

I have a question regarding possible consolidation. I have a loan from my university that is in default for about $3k. I currently have loans through the DOE in rehab (have paid 4 out of 12-15 months). First, is consolidation dependant on my credit score? I need to get ahold of my school to get the $3k loan in rehab. Can I consolidate just one loan with a 3rd party? Will I get a bad rate if I have a low credit score? I want to finish the DOE rehab in order to clear up my credit report, but then I'll be stuck at a high interest rate.

 

As you know now, consolidation is not in any way dependent on credit score, either for approval or for rate-setting. The rate is set by the federal government for all student loans. You can go with a third party (pretty much anyone) or you can consolidate with DOE. If the payments are going to be an issue for you, DOE generally (and this also depends on your situation) has better income contingent options -- your payments are some percentage of your Adjusted Gross Income (AGI) from your tax returns.

 

Yes, the rate will be higher as of July 1, but your reports will be much cleaner after rehab. Also, note that you'll most likely get the benefit of the new law that as of July 1, rehabs are only going to take 9 months rather than 12 (plus the obvious 1-3 possible additional months to get the loan transferred in either case) and most lenders & guarantors are going to go with the 9 month rule for EVERYONE who's in rehab as of July 1, not just those who started after that date.

 

 

I guess I am just looking for some advice on what I should do...

 

Thanks!!!

 

 

OK, so one of my questions was answered last night in another thread. I understand that credit does not affect the decision for consolidating my loans.

 

Is the cost savings by consolidating going to outweigh getting the negatives deleted from my credit report through rehabilitating the loan/s? I don’t even know what interest rate I am paying now… When I am done with rehabbing my Direct Loans, I think my balance will be around 7k. I thought I was told some of the collection costs be removed after rehab, but I’m not sure about that.

 

Since your loan is with DOE, they will remove the collection costs and fees (or at least some portion of them) when you're done with rehab. Whether or not that lower interest rate outweighs the obvious benefit of getting your reports cleaned up is really up to you. The other positive is that Direct Loans generally removes all of the negative information after rehab, rather than just the default notation like FFEL lenders.

 

Sorry, I’m just talking this through. If anyone can help me with how to best make this decision, I would appreciate it!!

 

 

How do I find out what interest rate I'm paying on my loans? I have a Direct Loan and a Perkins Loan, and I received the loans from 1995-1999.

 

It should be on whatever they're sending you about your loans. Check the paperwork you've gotten. Also, you can go to the NSLDS web site and see who has your loans and that should have your interest rate for each individual loan. The link is www.nslds.ed.gov. You'll need a PIN, but if you don't have one, you can register to get one on that site too.

 

...Still trying to weigh consolidation vs. rehab

 

Thanks!

 

I'm assuming that you're currently rehabbing the Direct Loans and are working on getting rehab for your Perkins? You can consolidate those together, so you could wait to finish rehabbing your Perkins and then just consolidate all at once or go ahead and consolidate your Direct Loans and then consolidate your Perkins along with those once that's done. Note that you almost definitely don't have just one Direct Loan if you went to school for more than one semester/quarter, even though it might seem like it. Each semester and loan type (unsubsidized Direct Loan & subsidized Direct Loan) is considered a separate loan, even though you sort of only apply the one time. So, if you had subsidized and unsubsidized loans for all 4 years, you could have 4 loans for each year you're in school (on a semester system) or 2 per year if you only had unsubsidized or subsidized -- they can definitely add up!!

 

Hope this helps!! So much of the decision just depends on what works for you. All other things being equal, I would always suggest rehab, but all things obviously aren't always equal, so you have to do what's best in your own circumstances.

 

Good luck!!

[mylittlelo]

Hello,

 

I have a question regarding possible consolidation. I have a loan from my university that is in default for about $3k. I currently have loans through the DOE in rehab (have paid 4 out of 12-15 months). First, is consolidation dependant on my credit score? I need to get ahold of my school to get the $3k loan in rehab. Can I consolidate just one loan with a 3rd party? Will I get a bad rate if I have a low credit score? I want to finish the DOE rehab in order to clear up my credit report, but then I'll be stuck at a high interest rate.

 

As you know now, consolidation is not in any way dependent on credit score, either for approval or for rate-setting. The rate is set by the federal government for all student loans. You can go with a third party (pretty much anyone) or you can consolidate with DOE. If the payments are going to be an issue for you, DOE generally (and this also depends on your situation) has better income contingent options -- your payments are some percentage of your Adjusted Gross Income (AGI) from your tax returns.

 

Yes, the rate will be higher as of July 1, but your reports will be much cleaner after rehab. Also, note that you'll most likely get the benefit of the new law that as of July 1, rehabs are only going to take 9 months rather than 12 (plus the obvious 1-3 possible additional months to get the loan transferred in either case) and most lenders & guarantors are going to go with the 9 month rule for EVERYONE who's in rehab as of July 1, not just those who started after that date.

 

 

I guess I am just looking for some advice on what I should do...

 

Thanks!!!

 

 

OK, so one of my questions was answered last night in another thread. I understand that credit does not affect the decision for consolidating my loans.

 

Is the cost savings by consolidating going to outweigh getting the negatives deleted from my credit report through rehabilitating the loan/s? I don’t even know what interest rate I am paying now… When I am done with rehabbing my Direct Loans, I think my balance will be around 7k. I thought I was told some of the collection costs be removed after rehab, but I’m not sure about that.

 

Since your loan is with DOE, they will remove the collection costs and fees (or at least some portion of them) when you're done with rehab. Whether or not that lower interest rate outweighs the obvious benefit of getting your reports cleaned up is really up to you. The other positive is that Direct Loans generally removes all of the negative information after rehab, rather than just the default notation like FFEL lenders.

 

Sorry, I’m just talking this through. If anyone can help me with how to best make this decision, I would appreciate it!!

 

 

How do I find out what interest rate I'm paying on my loans? I have a Direct Loan and a Perkins Loan, and I received the loans from 1995-1999.

 

It should be on whatever they're sending you about your loans. Check the paperwork you've gotten. Also, you can go to the NSLDS web site and see who has your loans and that should have your interest rate for each individual loan. The link is www.nslds.ed.gov. You'll need a PIN, but if you don't have one, you can register to get one on that site too.

 

...Still trying to weigh consolidation vs. rehab

 

Thanks!

 

I'm assuming that you're currently rehabbing the Direct Loans and are working on getting rehab for your Perkins? Yes, I am rehabbing the Direct Loans, and am in default (need to rehab) the Perkins. You can consolidate those together, so you could wait to finish rehabbing your Perkins and then just consolidate all at once or go ahead and consolidate your Direct Loans and then consolidate your Perkins along with those once that's done. Note that you almost definitely don't have just one Direct Loan if you went to school for more than one semester/quarter, even though it might seem like it. Yes, I think I have 5 Direct Loans Each semester and loan type (unsubsidized Direct Loan & subsidized Direct Loan) is considered a separate loan, even though you sort of only apply the one time. So, if you had subsidized and unsubsidized loans for all 4 years, you could have 4 loans for each year you're in school (on a semester system) or 2 per year if you only had unsubsidized or subsidized -- they can definitely add up!!

 

Hope this helps!! So much of the decision just depends on what works for you. All other things being equal, I would always suggest rehab, but all things obviously aren't always equal, so you have to do what's best in your own circumstances.

 

Good luck!!

 

Thank you so much for your in depth reply. If there is a chance that a portion of the collection costs/fees will be removed, I really think I will just finish out the rehab. That would be great if they determine it is rehabbed after 9 months, I am really trying to get my reports clean. Thanks again, I really appreciate it!