What pitfalls might I encounter when consolidating my student loans ?

Question

I have $16,000 in student loans. I graduated in May '07 (6 months grace period ends Nov '07), and I need to know whom to trust in loan consolidation for an interest rate reduction. I have received several offers through the mail, each promising interest rate reductions (each lender uses letterheads suggestive of affiliation with my college). How can I find out the best strategy before my grace period expires ?

Answer 1

Just one thing to consider is that once you consolidate you loose whatever grace period you have left. I would see if you can speak with a financial aid person at your school.

Answer 2

I've consolidated twice with two different lenders. I've had good luck and good customer service with a company called Access Group. You can find them at www.studentloanpeople.com.

Most companies are going to consolidate your loans in exactly the same way. The rate you get will probably be the same almost everywhere, because the companies will conglomerate the interest rates on all the loans you are consolidating and determine the applicable rate that way. Just try to consolidate with a company that will give you an interest rate reduction after making payments on time and a reduction for direct deposit. Contact your college and see what companies they recommend, it may streamline the process for you.

I don't see many pitfalls to consolidating. When you consolidate, you lock in the rate. The only pitfall will occur if the rate drops below the current rate in the near future. Although $16,000 may seem like a lot, you should be able to arrange a very affordable repayment plan. Good luck.

Answer 3

The first thing you need to look at is who you borrowed your loans from. If you have more than one lender, choose the lender you liked the best. If you only have one lender, check with them about what you need to do to consolidate your loans with them and what perks you may receive. You can also check directly with the Financial Aid Office of the school you graduated from to find out a preferred lender for consolidation purposes.
If you want to consolidate to lock in the lower interest rate but do not want to start paying back your loans, verify with the lender you plan to consolidate your loans with about their policy on an in school deferment - if you take six hours a semester or term, you may not have to pay back your loans but will still lock in a reasonable rate.

Answer 4

I am assuming these are federal student loans. Federal student loans (stafford, plus, etc) have to be serviced in accordance of what he US Dept of Ed says. This is what consolidastion does regardless of what company:

1. Locks in the current interest rate you have (rounded to the next highest 1/8%). If you have mult interest rates, you will get a weighted average.

Since you receive a lower interest rate during in school or in grace, it is wise to consolidate during your grace period, BUT at the end of your grace period. Since consolidations take 30-45 days to go through, it is wise to time your consol smartly. Apply for your consolidation 45 days before your first payment due date. This will ensure that you lock in your current "in grace" rate AND keep your full 6 month grace period.

NOW - here's what you getting in the mail - SPAM

They can offer you a reduction for auto debit from your checking account (.25% - most student loan comanies do this anyways- consolidation or not)

They can offer a discount for on time payments.

The US Dept of Ed uses ONE company to service their loans. That company is William D Ford, The Direct Loan Program. Now YOU can choose to go through someone else, but you may face your loan being sold left and right - an how can you make on time paymwnts with that??

I worked for Direct Loans for 7 years. We are scrutized closely by the federal government. They made sure we serviced the loans correctly and fairly.

Whomever you choose, I would ask a million questions, read everything they give and remember that once you've consolidated, you cannot re-consolidate and you are locked in.

Direct Loans ph # 1-800-848-0979

Answer 5

First remember that the interest rates, regardless of the lender will be the same as long as you compare apples to apples. What you need to look at are the borrower benefits that the new consoildation loans provide. They will generally be different from the original benefits when you took out the loan. You will lose the original ones. Stick with the major players in this field. Ask your financial aid office for help.

Answer 6

My daughter consolidated inner optimum and federal. (optimum federal are literally privately held besides, merely federally subsidized/insured in case of default) there are countless companies that consolidate. My first advice may be do no longer consolidate with Sallie Mae or the others that initially write the loans on your college. they in many situations are much less very own to handle and sense that they have have been given you ever already, so do no longer would desire to be aggressive. in case you do a seek for and learn the suggestions, you will detect a consolidation plan acceptable for you. expenses of activity and words substitute, and there is not any longer every person corporation which will in valuable concern all financial desires. merely verify you get all your loans listed as quickly as you consolidate. Your financial help place of work ought to have the means that would actual assist you detect all of them. My daughter ignored one, so had to pay it one after the numerous. fortuitously it strengthen into sufficiently small that she merely paid it off thoroughly. i comprehend that does no longer furnish you a undeniable corporation to hunt for, yet optimistically it furnish you a start up indoors the suited direction.