Student loan question

miked · 06-09-2005, 06:39 AM

I was reading in Kipplinger that pretty soon, the interest rates for Stafford loans will be going up. They were advising that people with outstanding loans should consolidate. I only have like 4k in loans or something and each month, the gov't takes $50 from my account (for like the next 8 years or so). I have a few questions.

With such a low amount, does it make sense to consolidate?

I googled some info, but it seems as if there are 1000 places to consolidate, is any better than the other?

Will this help my credit (I don't have bad credit, but every little bit helps)?

Thanks.

wade moore · 06-09-2005, 06:42 AM

Do you only have one loan? If you only have one loan, you cannot consolidate. The purpose of consolidation is taking more than one student loan and rolling them together under the same lender and interest rate.

miked · 06-09-2005, 06:45 AM

Ah, well then I guess I have no need. I thought I could somehow get a lower rate, but I guess the definition of consolidation eluded me this early in the morning. Thanks.

Barkeep49 · 06-09-2005, 07:17 AM

Quote:

Originally Posted by wade moore

Do you only have one loan? If you only have one loan, you cannot consolidate. The purpose of consolidation is taking more than one student loan and rolling them together under the same lender and interest rate.

Are you sure about this? I know several people who have consolidated multiple times. It's possible they've got multiple loans, but it seems like they wouldn't be able to do this the two or three times they have.

gottimd · 06-09-2005, 07:24 AM

Quote:

Originally Posted by Barkeep49

Are you sure about this? I know several people who have consolidated multiple times. It's possible they've got multiple loans, but it seems like they wouldn't be able to do this the two or three times they have.

I would think with only one loan, you can only shop around for better interest rates, because what exactly would you be consolidating? I could see if you had other expenses/debt that you were trying to consolidate. I routinely call my credit card companies and negotiate better interest rates, its a good habit to get into, especially if you pay a decent amount/month and are always on time with your payments.

Ksyrup · 06-09-2005, 07:46 AM

You can only consolidate once. I'm not sure about consolidating one loan, because I had 4 loans. I got screwed - I consolidated right before rates dropped, because I thought I needed to while we were buying a house. Then I got an unexpected raise, and watched my interest rate sit around 8% while rates dropped to what, 1-2%? Insanity.

I started with something like $50K in loans, but once I got it down to something manageable, I found a no-interest credit card that allowed me to transfer my student loan (not all of them do), so rather than paying 80% interest of every monthly payment, 100% of my payments now go to paying the principal down. I've got the remaining $9K of my loans on a credit card at 0% interest until January 2006, and I expect to pay it off in December or, if I can't, I'll just transfer what's left to another 0% interest rate card.

With only $4K of loans, this should be pretty easy for you to do (depending on your credit). That way you're not paying any interest. It might require you to pay more than $50 a month in the minimum monthly payment, though, although I got a credit card where I transferred $10K of my loan (since paid off with an inheritance) and only had $10 minimum payments. That was incredible. I coasted for 3 months, got the money from my aunt's estate, and paid it off.

wade moore · 06-09-2005, 07:47 AM

I'm with gottimd on this one... were they consolidating or refinancing?

I know as far as consolidating with a "federal loan consolidation" you HAVE to have more than one loan. To do it through a private company, that may not be the cause but through any federal loan consolidation program you have to have at least two.

Samdari · 06-09-2005, 09:17 AM

Quote:

Originally Posted by wade moore

I'm with gottimd on this one... were they consolidating or refinancing?

I know as far as consolidating with a "federal loan consolidation" you HAVE to have more than one loan. To do it through a private company, that may not be the cause but through any federal loan consolidation program you have to have at least two.

Acually, I think you not only need more than one loan, but need to have loans from more than one lender. I have like 10 federal student loans, but was told several times I was not eligible for federal student loan consolidation, since they were all from the same lender.

I think the confusion lies in that private lenders can refinance any kind of debt you have, but you need to meet certain criteria in order for the refinanced loans to be federally guaranteed. That won't stop other companies from trying to give you a single loan to cover all of your student loans, if they feel you are worth the risk.

dacman · 06-09-2005, 09:21 AM

Stafford loan rates are variable. You can consolidate one loan to lock in an interest rate, but with one huge stipulation. With only 1 loan, you must use your one any only lender for that consolidation loan -- you can't shop around.

wade moore · 06-09-2005, 09:35 AM

Yeah, I consolidated multiple federal loans from multiple lenders..

I owe about $35k at this point with about $9k of it from a private lender that I cannot consolidate...

I went from about $450 a month in payments to $225, it was nice.. I think I'm at about 4% on my consolidated loan...

cthomer5000 · 06-09-2005, 09:37 AM

I know you can only consolidate once.

I've got about $20-25K left to pay off. sigh.

Eaglesfan27 · 06-09-2005, 10:04 AM

Quote:

Originally Posted by cthomer5000

I know you can only consolidate once.

I've got about $20-25K left to pay off. sigh.

I have over 160k to still pay off

I also know that you can only consolidate once and not all loans can be consolidated.

Klinglerware · 06-09-2005, 10:05 AM

Quote:

Originally Posted by Samdari

Acually, I think you not only need more than one loan, but need to have loans from more than one lender.

I'm not sure if that is really true--all my federal loans came from one lender, but I was still able to consolidate.

If you are eligible, I'd do it ASAP (any rate changes take effect in July)--it's doubtful that you'll see rates this low in a very long time.

Private loans on the other hand, are another, very sad, story. My rate was adjusted upward 3 times in the past six months...

Samdari · 06-09-2005, 10:28 AM

Quote:

Originally Posted by Klinglerware

I'm not sure if that is really true--all my federal loans came from one lender, but I was still able to consolidate.

If you are eligible, I'd do it ASAP (any rate changes take effect in July)--it's doubtful that you'll see rates this low in a very long time.

Private loans on the other hand, are another, very sad, story. My rate was adjusted upward 3 times in the past six months...

Dacman had it right - I can consolidate, but only with the current holder of my loans, since I got them all from one lender. Thus, all the companies calling, talking to me for a few minutes, and then telling me I was ineligible were telling me I was ineligible from their point of view - they could not consolidate my loans.

I actually have no interest in consolidation right now, despite being eligible. I am 3 years from being completely out from under them, and all the consolidation loans will extend that term to 10 years.

Klinglerware · 06-09-2005, 10:39 AM

Quote:

Originally Posted by Samdari

Dacman had it right - I can consolidate, but only with the current holder of my loans, since I got them all from one lender. Thus, all the companies calling, talking to me for a few minutes, and then telling me I was ineligible were telling me I was ineligible from their point of view - they could not consolidate my loans.

I actually have no interest in consolidation right now, despite being eligible. I am 3 years from being completely out from under them, and all the consolidation loans will extend that term to 10 years.

Yes, I did it with the same lender. I figured, since the federal consolidation rules are the same for all financial institutions, I would just make it easy on myself and cut out the "shopping around" part which seems almost meaningless. Didn't realize that I could only do it with my lender, so I'm even more glad I didn't waste my time.

As for your second paragraph, that makes sense too--if you don't have a lot in loans and you are near complete repayment, consolidation doesn't make as much sense. But if you are nowhere near paying them off, then it makes much more sense to consolidate: the rates are going to go back up, so if you can lock in a rate now, you should. Yes, it can extend the repayment period, but I don't think there are any penalties for repaying it faster, if it is a federal loan. If you are disciplined enough, you could apply the money you would be paying in interest (if you didn't consolidate) to the principal, and be done with your loan faster...

06-09-2005, 07:46 AM	#6
Ksyrup This guy has posted so much, his fingers are about to fall off. Join Date: Nov 2000 Location: In Absentia	You can only consolidate once. I'm not sure about consolidating one loan, because I had 4 loans. I got screwed - I consolidated right before rates dropped, because I thought I needed to while we were buying a house. Then I got an unexpected raise, and watched my interest rate sit around 8% while rates dropped to what, 1-2%? Insanity. I started with something like $50K in loans, but once I got it down to something manageable, I found a no-interest credit card that allowed me to transfer my student loan (not all of them do), so rather than paying 80% interest of every monthly payment, 100% of my payments now go to paying the principal down. I've got the remaining $9K of my loans on a credit card at 0% interest until January 2006, and I expect to pay it off in December or, if I can't, I'll just transfer what's left to another 0% interest rate card. With only $4K of loans, this should be pretty easy for you to do (depending on your credit). That way you're not paying any interest. It might require you to pay more than $50 a month in the minimum monthly payment, though, although I got a credit card where I transferred $10K of my loan (since paid off with an inheritance) and only had $10 minimum payments. That was incredible. I coasted for 3 months, got the money from my aunt's estate, and paid it off. __________________ M's pitcher Miguel Batista: "Now, I feel like I've had everything. I've talked pitching with Sandy Koufax, had Kenny G play for me. Maybe if I could have an interview with God, then I'd be served. I'd be complete."

06-09-2005, 09:21 AM	#9
dacman College Benchwarmer Join Date: Oct 2000 Location: speak to the trout	Stafford loan rates are variable. You can consolidate one loan to lock in an interest rate, but with one huge stipulation. With only 1 loan, you must use your one any only lender for that consolidation loan -- you can't shop around. __________________ No signatures allowed.

06-09-2005, 06:45 AM	#3
miked College Starter Join Date: Jun 2001 Location: The Dirty	Ah, well then I guess I have no need. I thought I could somehow get a lower rate, but I guess the definition of consolidation eluded me this early in the morning. Thanks.

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