Full Version: Need advice for loan consolidation
I need to consolidate sallie mae student loans, who offers best interest rate right now.
Consolidation rates are based on the interest rates on your existing loans. Whoever you use will have the best rates.
It's best to make your choice based on service. Many here have had good and bad experiences with various lenders, but we do not promote any as a board.
It's best to make your choice based on service. Many here have had good and bad experiences with various lenders, but we do not promote any as a board.
Right now my loans are deffered because Im going back to school in April and won't finish school till anothere three years or so, my current loans are all with Sallie mae. Should I leave them alone or consolidate them right now, sallie mae is offereing 4.7 interest. What is the best to do, as I said they're defered for some time, but Im just woried the interest goes up in the future.
Interest rate for student loans is not set by the holder of the loans - you'll get the same base rate anywhere you go.
HOWEVER - some companies offer "back end" rate reductions (like .25% reduction for setting up automatic payments, or so much off after so many months of on-time payments). Look for who offers good customer service (you'll be dealing with them for a while, after all!) and good incentives (rate reductions).
That being said, it is my understanding (which may be completely wrong - I'm still trying to get good info myself) that the interest rates on student loans and consolidations will be set at 6.8% come July 1. So, if your rate is lower than that, you might be best served to go ahead and consolidate now, before rates go up.
Check to be sure, though, because I'm having a hard time finding the info to be sure.
HOWEVER - some companies offer "back end" rate reductions (like .25% reduction for setting up automatic payments, or so much off after so many months of on-time payments). Look for who offers good customer service (you'll be dealing with them for a while, after all!) and good incentives (rate reductions).
That being said, it is my understanding (which may be completely wrong - I'm still trying to get good info myself) that the interest rates on student loans and consolidations will be set at 6.8% come July 1. So, if your rate is lower than that, you might be best served to go ahead and consolidate now, before rates go up.
Check to be sure, though, because I'm having a hard time finding the info to be sure.
Rates WILL be fixed at 6.8% beginning 7/1. I and others have posted the information here before. Search for it and you will find it.
I've been searching, I've not been finding. Where is the info straight from the source? I've heard som many variations on what is going to happen, that I want to read what DOE says it's going to do and when.
Does anyone have a link to that?
Does anyone have a link to that?
Found this by simply doing a google search.
On December 21, 2005, Congress passed legislation that will cut billions of dollars in funding out of the federal student loan program. The Wall Street Journal reports that the "loss of $12.7 billion [in funding] means that graduates will face higher interest payments, fewer options." *
Under the new law, interest rates on federal Stafford loans issued after July 1, 2006 will jump from the current variable 4.7% (for in school borrowers) to a fixed 6.8%, irrespective of market interest rates. Interest rates on federal PLUS loans (Parent Loans for Undergraduate Students) will jump from the current variable 6.1% to a fixed 8.5%.
While the new law will not affect loans taken out prior to July 1, current federal borrowers should also expect a similar 30%+ jump in their payments when the government completes its annual reset of student loan interest rates on July 1. Under current law, the government resets student loan interest rates every July based on then prevailing market interest rates. The benchmark interest rate used by the government, the 91-day Treasury bill rate, has risen approximately 30% since July 2005 and the Federal Reserve is expected to push market interest rates even higher between now and July 1.
As a result, according to The Journal, that someone with $20,000 in student loans can expect to pay over $2,000 more in interest over the life of the loan.*
One way current federal borrowers can avoid paying more on their loans is to consolidate under the Federal Student Loan Consolidation Program. In recent years, "borrowers have been able to shave thousands of dollars in interest from their loans by consolidating loans at record low rates," according to USA Today.**
By consolidating prior to July 1, 2006, borrowers can lock in a single, historically-low fixed rate on their loans (as low 4.75%, and the fixed rate can drop even lower to 3.5%, after taking into account additional benefits offered by many consolidation lenders).
Borrowers considering consolidation this year must be keenly aware of the calendar, given the consequences of missing the June 30, 2006 deadline. In order to qualify for today's lower rates, a borrower must complete the federal consolidation application prior to July 1, 2006. Those submitting their applications after July 1 will be stuck with the higher rates that will take effect on July 1.
For current students interested in consolidation timing is particularly important.
Students leaving school prior to June 30, 2006, can complete their consolidation applications anytime between now and June 30, but should keep in mind that last year major processing delays occurred as the deadline approached. Most lenders will then hold a student's consolidation application for processing until after the student's graduation date, thus locking in current rates while still preserving the benefit of the six-month "grace period" following separation from school during which no payments are required.
Students who will be in school beyond June 2006, should carefully consider applying for "in-school" consolidation. Currently, U.S. Department of Education regulations permit students who are in school to consolidate their loans, although the new law is set to eliminate that option for students. Just as with a typical consolidation loan, repayment on an "in-school" consolidation loan does not begin until after the borrower leaves school, but "in-school" consolidation does require the borrower to waive the six-month "grace period" following school, during which no payments are required. The practical effect of waiving the grace period is that the borrower will lose six months of government-subsidized interest payments on his or her subsidized Stafford loans (the interest on unsubsidized Stafford loans is added to the principal during the grace period).
In addition, graduates with high-rate federal consolidation loans who are looking at refinancing should do so now as the new law will essentially eliminate the ability to refinance federal consolidation loans.
--------------------------------------------------------------------------------
* Congress Cuts Funding For Student Loans, The Wall Street Journal, December 22, 2005, Section D1.
** Consolidating Student Loans Now Will Save on Interest, USA Today, December 22, 2005, Online Edition.
On December 21, 2005, Congress passed legislation that will cut billions of dollars in funding out of the federal student loan program. The Wall Street Journal reports that the "loss of $12.7 billion [in funding] means that graduates will face higher interest payments, fewer options." *
Under the new law, interest rates on federal Stafford loans issued after July 1, 2006 will jump from the current variable 4.7% (for in school borrowers) to a fixed 6.8%, irrespective of market interest rates. Interest rates on federal PLUS loans (Parent Loans for Undergraduate Students) will jump from the current variable 6.1% to a fixed 8.5%.
While the new law will not affect loans taken out prior to July 1, current federal borrowers should also expect a similar 30%+ jump in their payments when the government completes its annual reset of student loan interest rates on July 1. Under current law, the government resets student loan interest rates every July based on then prevailing market interest rates. The benchmark interest rate used by the government, the 91-day Treasury bill rate, has risen approximately 30% since July 2005 and the Federal Reserve is expected to push market interest rates even higher between now and July 1.
As a result, according to The Journal, that someone with $20,000 in student loans can expect to pay over $2,000 more in interest over the life of the loan.*
One way current federal borrowers can avoid paying more on their loans is to consolidate under the Federal Student Loan Consolidation Program. In recent years, "borrowers have been able to shave thousands of dollars in interest from their loans by consolidating loans at record low rates," according to USA Today.**
By consolidating prior to July 1, 2006, borrowers can lock in a single, historically-low fixed rate on their loans (as low 4.75%, and the fixed rate can drop even lower to 3.5%, after taking into account additional benefits offered by many consolidation lenders).
Borrowers considering consolidation this year must be keenly aware of the calendar, given the consequences of missing the June 30, 2006 deadline. In order to qualify for today's lower rates, a borrower must complete the federal consolidation application prior to July 1, 2006. Those submitting their applications after July 1 will be stuck with the higher rates that will take effect on July 1.
For current students interested in consolidation timing is particularly important.
Students leaving school prior to June 30, 2006, can complete their consolidation applications anytime between now and June 30, but should keep in mind that last year major processing delays occurred as the deadline approached. Most lenders will then hold a student's consolidation application for processing until after the student's graduation date, thus locking in current rates while still preserving the benefit of the six-month "grace period" following separation from school during which no payments are required.
Students who will be in school beyond June 2006, should carefully consider applying for "in-school" consolidation. Currently, U.S. Department of Education regulations permit students who are in school to consolidate their loans, although the new law is set to eliminate that option for students. Just as with a typical consolidation loan, repayment on an "in-school" consolidation loan does not begin until after the borrower leaves school, but "in-school" consolidation does require the borrower to waive the six-month "grace period" following school, during which no payments are required. The practical effect of waiving the grace period is that the borrower will lose six months of government-subsidized interest payments on his or her subsidized Stafford loans (the interest on unsubsidized Stafford loans is added to the principal during the grace period).
In addition, graduates with high-rate federal consolidation loans who are looking at refinancing should do so now as the new law will essentially eliminate the ability to refinance federal consolidation loans.
--------------------------------------------------------------------------------
* Congress Cuts Funding For Student Loans, The Wall Street Journal, December 22, 2005, Section D1.
** Consolidating Student Loans Now Will Save on Interest, USA Today, December 22, 2005, Online Edition.
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In addition, graduates with high-rate federal consolidation loans who are looking at refinancing should do so now as the new law will essentially eliminate the ability to refinance federal consolidation loans.
--------------------------------------------------------------------------------
Yep - it's that part I want more info about and can't find. I need specifics.
In addition, graduates with high-rate federal consolidation loans who are looking at refinancing should do so now as the new law will essentially eliminate the ability to refinance federal consolidation loans.
--------------------------------------------------------------------------------
Yep - it's that part I want more info about and can't find. I need specifics.
QUOTE(grammers @ Mar 27 2006, 09:14 PM) 
QUOTE
In addition, graduates with high-rate federal consolidation loans who are looking at refinancing should do so now as the new law will essentially eliminate the ability to refinance federal consolidation loans.
--------------------------------------------------------------------------------
Yep - it's that part I want more info about and can't find. I need specifics.
What more could you possibly want?
QUOTE(grammers @ Mar 27 2006, 10:14 PM)
[
In addition, graduates with high-rate federal consolidation loans who are looking at refinancing should do so now as the new law will essentially eliminate the ability to refinance federal consolidation loans.
--------------------------------------------------------------------------------
Yep - it's that part I want more info about and can't find. I need specifics. Just exactly are you looking for that is not already spelled out? If you have already consolidated your student loans, you will not be allowed to reconsolidate under the new rules. There really isn't anything vague about that.
In addition, graduates with high-rate federal consolidation loans who are looking at refinancing should do so now as the new law will essentially eliminate the ability to refinance federal consolidation loans.
--------------------------------------------------------------------------------
Yep - it's that part I want more info about and can't find. I need specifics. Just exactly are you looking for that is not already spelled out? If you have already consolidated your student loans, you will not be allowed to reconsolidate under the new rules. There really isn't anything vague about that.
fla-tan
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