Since I have my loans through Nelnet, I decided to ask them about consolidating them all.
- The interest rate would be 6.5% right now over 30yrs. I'm not sure if getting it to 20yrs would lower or drop the rate. But I would like it to be 30yrs to get the lowest payments in case of a financial emergency, and pay an extra $100-200/mo. to pay it off early.
- The rate is fixed.
- No fees to pay off early.
- You can make payments on their website, and even make larger payments.
- He mentioned that since the goverment changed parties, the democrats may lower the rates next year. So he says I might want to wait to consolodate until mid next year. "The rate could go from 6.5% to 5.5% at that time."
So my question is, should I take the chance and wait it out?
Full Version: How does this offer sound?
QUOTE(Jon77 @ Dec 5 2007, 10:56 AM) 
Since I have my loans through Nelnet, I decided to ask them about consolidating them all.
- The interest rate would be 6.5% right now over 30yrs. I'm not sure if getting it to 20yrs would lower or drop the rate. But I would like it to be 30yrs to get the lowest payments in case of a financial emergency, and pay an extra $100-200/mo. to pay it off early.
Rates for consolidation loans are always set at the weighted average of your current loans, rounded up to the nearest 1/8%. It doesn't matter how long it's for. That's mandated by the government.
- The rate is fixed.
Yup. That's one of the biggest pros of the consolidation program.
- No fees to pay off early.
There never are.
- You can make payments on their website, and even make larger payments.
Most of the larger lenders have this. It's similar to on-line bill pay (as in, pretty much all of the larger banks - and most smaller ones -- offer it). It's a customer service issue and it's nice, but it's definitely not unique to Nelnet.
- He mentioned that since the goverment changed parties, the democrats may lower the rates next year. So he says I might want to wait to consolodate until mid next year. "The rate could go from 6.5% to 5.5% at that time."
This is cr@p. Rates are reset *every* July 1. That's in the Higher Education Act -- the party in control is completely irrelevant. It's based on the federal interest rates. Anyway, even if it was true (which it really, really, really isn't), the decision is made by the department of education, which is not under Congress, but rather under the president, who is not a Democrat the last time I checked
!! If he doesn't know that, I'm a bit concerned!!
So my question is, should I take the chance and wait it out?
This is always the risk of consolidation. It's just like choosing a fixed rate vs. adjustable rate mortgage. Rates could go down on July 1, then you would be better off waiting. However, they could go certainly go up, too, and then waiting isn't good. And, since it's reset every year, you could go on this roller coaster for the rest of your loan period, wondering if maybe they'll go down next year, and so on.
- The interest rate would be 6.5% right now over 30yrs. I'm not sure if getting it to 20yrs would lower or drop the rate. But I would like it to be 30yrs to get the lowest payments in case of a financial emergency, and pay an extra $100-200/mo. to pay it off early.
Rates for consolidation loans are always set at the weighted average of your current loans, rounded up to the nearest 1/8%. It doesn't matter how long it's for. That's mandated by the government.
- The rate is fixed.
Yup. That's one of the biggest pros of the consolidation program.
- No fees to pay off early.
There never are.
- You can make payments on their website, and even make larger payments.
Most of the larger lenders have this. It's similar to on-line bill pay (as in, pretty much all of the larger banks - and most smaller ones -- offer it). It's a customer service issue and it's nice, but it's definitely not unique to Nelnet.
- He mentioned that since the goverment changed parties, the democrats may lower the rates next year. So he says I might want to wait to consolodate until mid next year. "The rate could go from 6.5% to 5.5% at that time."
This is cr@p. Rates are reset *every* July 1. That's in the Higher Education Act -- the party in control is completely irrelevant. It's based on the federal interest rates. Anyway, even if it was true (which it really, really, really isn't), the decision is made by the department of education, which is not under Congress, but rather under the president, who is not a Democrat the last time I checked
!! If he doesn't know that, I'm a bit concerned!! So my question is, should I take the chance and wait it out?
This is always the risk of consolidation. It's just like choosing a fixed rate vs. adjustable rate mortgage. Rates could go down on July 1, then you would be better off waiting. However, they could go certainly go up, too, and then waiting isn't good. And, since it's reset every year, you could go on this roller coaster for the rest of your loan period, wondering if maybe they'll go down next year, and so on.
I hope this helps. Everything the Nelnet rep told you is either 1) true of all consolidation loans or 2) made up out of nowhere (that last one). When you're deciding on consolidation lenders, customer service is really all you can compare it on. Everything else is the same for all lenders.
Just an FYI, if you are at all concerned about ever needing truly income contingent (vs. income sensitive, which eventually end up going up, regardless of if your income has rebounded or not) payment terms, then you'll want to look at consolidating through Direct Loans (through the DOE). Just something to consider.
Good luck!!
QUOTE(Jon77 @ Dec 5 2007, 11:56 AM)
Since I have my loans through Nelnet, I decided to ask them about consolidating them all.
- The interest rate would be 6.5% right now over 30yrs. I'm not sure if getting it to 20yrs would lower or drop the rate. But I would like it to be 30yrs to get the lowest payments in case of a financial emergency, and pay an extra $100-200/mo. to pay it off early.
shorter term will not change interest rate, just reduce the total dollar amount you pay in interest
- The rate is fixed.
Yep. All federal consolidation loan taken out now are at a fixed rate...and the rate Nelnet offered you is identical to what any other lender would offer you for a FFELP consolidation loan.
- No fees to pay off early.
Right... like always with all lenders for all federal student loans.
- You can make payments on their website, and even make larger payments.
Right.
- He mentioned that since the goverment changed parties, the democrats may lower the rates next year. So he says I might want to wait to consolodate until mid next year. "The rate could go from 6.5% to 5.5% at that time."
If some of the loans you consolidate are currently at a variable rate, it go down next year....or up. Nelnet will use the weighted average of the rates and balances of the loans you are consolidating, just like everyone else. The recent changes in federal regulations do not really have any impact on your rate whatsoever, since you're consolidating loans taken out before 7/1/2008.
So my question is, should I take the chance and wait it out?
To provide a good answer to that question, I would need to know the loan types and rates for all of the loans you are consolidating.
- The interest rate would be 6.5% right now over 30yrs. I'm not sure if getting it to 20yrs would lower or drop the rate. But I would like it to be 30yrs to get the lowest payments in case of a financial emergency, and pay an extra $100-200/mo. to pay it off early.
shorter term will not change interest rate, just reduce the total dollar amount you pay in interest
- The rate is fixed.
Yep. All federal consolidation loan taken out now are at a fixed rate...and the rate Nelnet offered you is identical to what any other lender would offer you for a FFELP consolidation loan.
- No fees to pay off early.
Right... like always with all lenders for all federal student loans.
- You can make payments on their website, and even make larger payments.
Right.
- He mentioned that since the goverment changed parties, the democrats may lower the rates next year. So he says I might want to wait to consolodate until mid next year. "The rate could go from 6.5% to 5.5% at that time."
If some of the loans you consolidate are currently at a variable rate, it go down next year....or up. Nelnet will use the weighted average of the rates and balances of the loans you are consolidating, just like everyone else. The recent changes in federal regulations do not really have any impact on your rate whatsoever, since you're consolidating loans taken out before 7/1/2008.
So my question is, should I take the chance and wait it out?
To provide a good answer to that question, I would need to know the loan types and rates for all of the loans you are consolidating.
What you don't seem to understand, and need to know: the terms Nelnet offered you were set by the government, not Nelnet. Your max repayment term, interest rate, repayment options, etc will be the same with any other federal lender. You're not shopping around for terms since they're the same anywhere... service and other benefits are the main difference between lenders on federal consolidation loans.
Ziggy, the "college cost reduction and access act" does reduce the interest rates on NEW subsidized stafford loans effective 7/1/08. The 2 big misconceptions:
-Many people think this will reduce the rate of existing Stafford loans; it won't, HOWEVER, existing variable-rate stafford loans will have their rate changed next July, as usual.
-People seem to like to ignore the "subsidized"... the unsub loans taken out from 7/1/08 to 6/30/12 will be at 6.8%, as was planned before this new law was passed.
My personal experience: after having patiently been explained this, several times, 6 out of 10 borrowers will still say "so you're saying that a new law make my interest rate go down next July, right?" (Or even better: "no, I read in the paper that ALL rates are going down and if you don't lower my rate I'll talk to my lawyer".) I think your suggestion that the Nelnet rep just made things up may not be the case at all.
It's also important to note that the new, "income-based" repayment plan for FFELs allows for payments of 15% of the borrowers disposable income, adjusted for family size (even if that amount is less then the monthly interest), and forgiveness of the unpaid balance after 25 years. Sound familiar?
Anyway, OP, if you like Nelnet's service by all means go with them. If you don't like their service, you can get exactly what Nelnet offered you from many other student lenders.
-Many people think this will reduce the rate of existing Stafford loans; it won't, HOWEVER, existing variable-rate stafford loans will have their rate changed next July, as usual.
-People seem to like to ignore the "subsidized"... the unsub loans taken out from 7/1/08 to 6/30/12 will be at 6.8%, as was planned before this new law was passed.
My personal experience: after having patiently been explained this, several times, 6 out of 10 borrowers will still say "so you're saying that a new law make my interest rate go down next July, right?" (Or even better: "no, I read in the paper that ALL rates are going down and if you don't lower my rate I'll talk to my lawyer".) I think your suggestion that the Nelnet rep just made things up may not be the case at all.
It's also important to note that the new, "income-based" repayment plan for FFELs allows for payments of 15% of the borrowers disposable income, adjusted for family size (even if that amount is less then the monthly interest), and forgiveness of the unpaid balance after 25 years. Sound familiar?
Anyway, OP, if you like Nelnet's service by all means go with them. If you don't like their service, you can get exactly what Nelnet offered you from many other student lenders.
All of my loans are Stafford. And as for Nelnet's service, I really can't say anything. It's not like I really had to deal with them. I signed for the loan, they gave me money, and have marked them correctly on my reports ever since.
Is there a helpful comparison article on different companies? I need to get this done asap as my first payment is coming up quick, so I don't have the time to call a bunch of people and ask about their services. How much different can they be anyway?
Thanks for the help. I learned a lot here.
edit: Actually, this is exactly what I was looking for: http://www.studentlendingworks.org/_docs/F...isonChartOH.pdf
Is there a helpful comparison article on different companies? I need to get this done asap as my first payment is coming up quick, so I don't have the time to call a bunch of people and ask about their services. How much different can they be anyway?
Thanks for the help. I learned a lot here.
edit: Actually, this is exactly what I was looking for: http://www.studentlendingworks.org/_docs/F...isonChartOH.pdf
QUOTE(Jon77 @ Dec 7 2007, 11:53 AM)
edit: Actually, this is exactly what I was looking for: http://www.studentlendingworks.org/_docs/F...isonChartOH.pdf
That chart is worthless, since most of the lenders on it have changed their consolidation incentives since it was made. Also, notice how it lists the Department of Education, as well as most of the biggest and most reputable lenders at the bottom? Enough said.
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