does anyone have info about consolidating loans while in school?

Question

Can you only do it once - what rates are they talking about?

Answer 1

Stafford Loan variable interest rates are scheduled to increase by almost 2% in a few weeks, so waiting until after graduation will *not* get you the best interest rate. The current rate on *all* your Stafford Loans is 4.7%. If you consolidate now, you can lock in this rate (rounded up to the nearest 1/8th of a %) for a total, *fixed* rate of 4.75% (sometimes less!). If you don't consolidate before July 1st, the rate on your current loans will rise to 6.54%.*

In-School Consolidation is basically the same process as post-grad consolidation with ONE extra step.

See, technically, (by law) students weren't meant to be able to consolidate their federal loans until *after* they had entered a "repayment" status. Since, obviously, an in-school student can't also be an in-repayment student, this posed a problem for students who wanted to lock in the interest rates ASAP... But there IS a "loophole" in the regulations (perfectly legal!) that allows any student (even one still in school) to *request* that they [temporarily] be placed in an "in-repayment" status. Once you are considered "in repayment," a lender can consolidate your loans. After that, you can ask they they place you *back* at an in-school deferment status -- at which point you can wait until after you leave school to begin repaying your loans. For another explanation of in-school consolidation, see this site: http://www.finaid.org/loans/earlyrepaymentloophole.phtml

NOTE: beginning on July 1, 2006, this loophole will be "closed," so if you want to consolidate early, do it now.

The biggest downside to consolidating (at any time) is that you will lose your 6-month grace period (9 months for Perkins), so your first payment will probably be due within a month after you graduate.

You will, however, retain the ability to apply for deferments and forbearances. Even better, the subsidized portion of your Stafford loans will retain their interest subsidy (meaning that, even if you consolidate your Subsidized Stafford loans with other unsubsidized loans, the government will continue to pay interest on those Sub loans any time that you are in school or in-grace -- a great "perk" if you plan on going to Grad. school). In fact, if you decide to go to graduate school, your consolidation loan will be eligible for an in-school deferment (just as your Stafford and/or Perkins loans would be if you didn't consolidate).

It gets a little complicated, I know. All things considered, if you think you can handle losing your grace period, consolidating is probably your best move. 2% in interest can really add up over 10-30 years... (And no one yet knows that rates will be come July 2007, so you might end up saving more than 2%.)

To answer your other question.... You can only consolidate the same loans once. Of course, if you consolidate and later borrow new loans, you can obtain a *new* Federal Consolidation Loan comprised of (1) the old consolidation loan and (2) the new Stafford/Perkins loans you just borrowed. [But that's really the only way you can "reconsolidate."]

*A lot of things will be changing soon with regard to Stafford Loan interest rates. Although your current/old loans will remain at a variable rate (unless you consolidate) any NEW loans that you get beginning July 1st will be offered at a fixed rate of 6.8%. Unfortunately, there's not much you can do now about future loans, so it's best to just get the best rate you can on your old loans and deal with the reality of a higher rate on your future loans.

Answer 2

Your best bet is to wait until you finish school and take the entire set of loans and then consolidate because then you will get the best interest rate (that is the rate they are referring to). Most college loans are not incurring interest while you are in school so it is easier to just wait. If you are still not sure go to your financial aid office and they should be able to help or maybe contact the company your loans are handled through.

Answer 3

Go to your bank, they can help.