who has the best consolidation rates on studnet loans?

Answer 1

Well, fundamentally, interest rates are set by the Federal government and are based on the 91-Day Treasury Bill. The current rate on all Stafford Loans for all students currently in school (or for students in their grace or deferment periods) is 4.7%. As such, the rates (including the various borrower benefit "offers" you'll receive) are all going to be pretty close in the end.

You've probably already received flyers in the mail making claims like "rates as low as 2.7%". This is because there are *tons* of consolidation lenders competing for YOU, so they pretty much have to offer you a rate better than the federal 4.7% base rate if they want to have a chance at getting your business. They do this by offering additional benefits (rate reductions, principal balance reductions, etc.) to students who consolidate with them.

It's good that you want to get the "best" rate -- but, for your own sake, be cautious. The best rate doesn't necessarily mean the best *loan* or the best *lender.* There are a lot of disreputable lenders out there. In fact, the lender offering you a rock-bottom interest rate is probably the least reputable of all. The really great, reliable lenders don't have to sell their souls to get your business. The best way to find out if a lender is reputable is to ask your Financial Aid Office -- they know which companies are good and which aren't (and they often have solid working relationships with the lenders' representatives).

For your reference, Sallie Mae is the #1 Consolidation lender (i.e they do the most business). Citibank is a distant #2. These companies are on top because they rarely (if ever) sell your loans, they offer good customer service, they are technologically advanced, and they've been in "the business" for ages. For a list of other consolidation leaders, try this link: http://www.finaid.org/loans/biglenders.phtml ("consolidation" is kind of toward the bottom of the page). Most of these are reputable. Any of the top 6 would be good.

There are a few other things you might want to consider:

First, you need to make absolutely sure that you're getting a "Federal Consolidation Loan." Some companies have their own, sketchy version of consolidation that has nothing to do with the federal gov't. Basically, they take your nice, safe Stafford Loans and turn them into private loans with questionable terms. If you don't get a Federal Consolidation Loan, then you won't be entitled to any of the protection or benefits of the Federal Student Loan program. To protect yourself, make sure the application you complete says "Federal Consolidation Loan" at the top like this one: http://www.salliemae.com/apply/borrowing/pdf/SMARTLOAN_consol_app.pdf

Second, I know that "borrower benefits" are attractive -- and I fully support getting the best ones for my students. But make sure that you're weighing the monetary benefits with the qualitative benefits. When you consolidate, you're committing to a very long relationship with a single company. That company that offered you 2.7%... Ask yourself: have you ever heard of them? Do you know anyone who has used them successfully? Are you sure that you want the 3% rate loan with the no-name company? Or would you rather have the 3.5% rate loan with a lender you know and trust. It's up to you to decide, but before you do, make sure you know how much your overall payments would really change with that half-percent reduction. Try a "loan repayment calculator" like this one: http://www.finaid.org/calculators/loanpayments.phtml

Third, by all means, look into the companies with the really great-sounding benefits. Make sure you've read the "fine print": ask them how you earn the benefit, when it takes effect, and how you can potentially lose it. A lot of [good] lenders offer "principal reductions," but it's important to note that these reductions often don't take place right away and if you don't make ALL your payments on time, you may become ineligible. NOTE: this is a very good reason to set up auto-debit (so you never miss a payment).

Fourth, there should NEVER be any fees to consolidate. If you're working with a company that has fees, RUN -- it's a telltale sign that they are one of the "bad" companies. Similarly, Federal Consolidation Loans are always fixed-rate loans, so if you see someone offering you a variable rate loan, run from them too.

Finally, yes, these consolidation offers are very similar to credit card offers... except this is a much bigger decision. Unlike with credit cards, you can't just "drop" your consolidation lender. It's becoming near-impossible to reconsolidate, so make sure that you pick someone you trust. (Consider going with the lender you have now, since your school probably helped you pick them, right?)

Answer 2

there are many check them