I just started rehab with the CA and after 12 payments it goes back to Sallie Mae as a new loan. My interest rate in rehab is 9% and Dept of Ed told me that this was the rate when the loans were taken out over 20 years ago. He said that after rehab the "new" loan would could be no higher than the original 9% but he wouldn't give me an answer to what kind of rate I could expect as he said he can't predict interest rates a year in advance.

My question is, has anybody here had their interest rate reduced after rehab? I highly doubt that they would reduce the interest rate if they don't have to, but it's supposed to be considered like a "new" loan or even if you consider it a "refinanced" loan, I think a low interest rate would be fair.
My daughter is paying 3.3% on her student loan.

Well that's odd - I always thought interest on government backed student loans was variable annually, but I don't know much about 20-yr old loans either. Is this the original rate, or did you consolidate at some point to lock in that rate? Were these federally-backed loans (FFELP/Stafford/Perkins), or private loans? If they were private loans, that might explain things.... hmmmmm. Med school or law school loans are different too and usually have higher interest rates.



Nope - my interest rate stayed on the same annual adjustable schedule - up or down when rates were announced in July - didn't have anything to do with rehab.



It's not really a "new" loan. Just after you finish rehab, a lender agrees to pick you up again as a current customer. The interest rates themselves are set by the govt, not the lender.



Most students who graduated last year or this year will pay that on federally-backed loans or even lower if they consolidate during their grace period.

Sorry, I just don't know much about loans made 20 years ago or if they were made with different terms. Fla-tan might respond, he has a lot of knowledge about such things. He might be busy with post-hurricane activities though, so it could be a bit before he gets a chance to reply.

It was a Stafford loan and 9% was the original interest rate. It was the CA who originally told me that the rate could be lower after rehab but no higher. I called the Dept of Ed and they told me that was the original rate of the loan 20 years ago but couldn't answer my question on a lower rate after rehab. I guess I should just expect it to stay at 9%. Just curious if anyone got a reduced rate after rehab or if this is unheard of? Hell, maybe i should feel lucky, there may be others with hgher rates. Anybody here paying high rates?

Have you consolidated your loan? If not, (and, like Cheech, I'm not sure about older loans, but I would think that's still an option), then that might work for you -- the maximum interest rate for a consolidation loan is 8.25%. For loans taken out before 1998, the interest rate is the weighted average of the loans to be consolidated, to a maximum of 8.25%. So, that would at least reduce it by .75%. The company servicing my loan also offers a .25% interest rate reduction if you have the payments automatically deducted from your checking account and another 1% after 24 on-time payments. I think that's pretty standard among consolidation loan servicers. So, after a couple of years (depending on how long it would take you to pay these off), you'd be down to 7% -- and would be at 8% for those first 2 years.

I hope this helps!! Good luck!!