I need some advice

[dapo]

Hi all,

I am going to graduate this August and my total loans about 40K with Citi Bank and Sallie Mae. I have been receiving a lot of consolidation offers from many companies lately to consolidate my loans. I am so lost and I don’t know what to do. I need some advice.

Thank You,

[Cynic]

Federal Consolidation: fixed interest rate is a weighted average of the rates of the loans included, rounded up to highest 1/8%, there are 4 payment plans: level, graduated, income-sensitive, and any of the previous on an "extended" term where you have up to 25 years to repay based on a balance of 40k. That's basically it, gimmicks aside. You can do it with the federal government or with the eligible lender of your choice.

 

Some eligible lenders:

 

Department of Education

 

Citibank

 

Nelnet

 

AES

[dapo]

Thanks for the reply,

 

I am thinking to consolidate with Citi Bank. But when is the best time to do that, at the beg. or end of my grace period?

[TxQuiltGirl]

Thanks for the reply,

 

I am thinking to consolidate with Citi Bank. But when is the best time to do that, at the beg. or end of my grace period?

 

 

Start the process about halfway through your grace period, because it can take a while to get them consolidated. Good luck!

[dapo]

Thank you all

[Long Road]

I personally would not want to deal with Sallie Mae or Citi Bank for that many years.

 

My advice would be to look up Direct Loans.

[SimonDx]

I know sombody who consolidated, but realised they could have got a better deal after from another company. Make sure you are satisfied before you choose the consolidation company.

[ziggypop]

Just something to think about -- interest rate reductions for some number of on-time payments and promises of principal reduction after XX amount of time are great and all, but they're worth exactly zip until you actually get them. It takes about 4 seconds for whoever you consolidated with to get sold -- or transfer your loans to another servicer -- and then you may, or, to the point of this post, may not get all of those great perks that you were promised. So, take whatever deal is best for you RIGHT NOW and assume that you won't get the future incentives. Don't take a deal because there's better incentives in the future; there's absolutely no guarantee that you'll end up getting those deals. My advice is to go with the company you find has the best customer service or to go with, as Long Road suggested, Direct Loans. The possibility of true Income Contingent payments in case you ever have money problems is a huge positive ("income contingent" is only available through Direct Consolidation loans and is not the same thing as "income sensitive" that are offered through private lenders).

 

Yeah, now ask me how I know about the bait and switch abilities of loan consolidation companies

 

Good luck

[Long Road]

Direct loans Income Contigent was the right choice for us. Payments based on income, rate reduction of .25% for automatic bank withdrawal of funds, and it escapes me but there is some way to get the rate down another .25% for something else.

 

The sealer of the deal at the time was that a couple of loans were in default from a state authority and they suggested Direct Loans to solve the problem. Glad they did. I also like the fact that I don't see someone buying the DOE, lol. Add to that forgiveness after 25 years of payments if the balance is not paid off in that time, and you have a deal I'd take again today.

 

$.02

[Cynic]

I will personally vouch for Citi, and no I do not work for them.

 

Most of the people on Direct Loans ICR actually end up paying more over the repayment term then they would if they did it with a FFELP lender on a standard schedule without the incentives. Those that get the incentives almost always pay considerably less.

 

The bottom line is that although the remaining portion will get discharged after 25 years with ICR, most middle-class people would pay far more in the long-run with payments of 20% of their income for the 24 years prior to discharge.

 

People that borrow a lot and live on the border of poverty definitely would do better with ICR. They are the minority.