Student Loan Consolidation - Is this a SCAM?

[mdean07]

I’ve been getting all kinds of stuff in the mail telling me to consolidate my student loans…does anybody know anything about doing this? Is it a scam?

[sweeps]

It's not necessarily a scam, but you should shop around and make sure you're getting a good deal. Watch out for fees and high interest rates.

More info

[jmjj215]

And I'd add that you want to make sure you also evaluate your intensity toward debt reduction - if that's your goal.

[b4freedom]

You can consolidate your student loan debt.

However, that doesn't mean that the junk mail you just got wasn't a scam. Scams come in new forms every day. Make sure you check to make sure it's a legit company before giving out your personal information.

[CollegeLoanDiva]

Every year, in June of July, federal student loan rates increase. Depending on your status as a student, your interest rates will be different. They will be lowest while you are still a student, slightly higher during your 6 month grace period after graduation, and highest during the repayment period. If you consolidate your federal loan(s), you will be able to get the best (lowest) interest rate for your situation. You can consolidate even if you have one loan. This means that if you are currently a student with a 6% interest rate, you can consolidate however many loans you have at a fixed 6% for the life of the loan. Otherwise, the rate increase every year, depending on the country's economy or however the powers-that-be determine it. I consolidated mine at 5.3% before June of last year, before a 1% increase in rates. You should be able to consolidate with your current lender, who I am assuming is the U.S. Dept. of Ed. Private loans do not work like this. The offers you are probably receiving in the mail most likely refer to federal student loans, which are the easiest to manage. I've found that most of these offers have bad rates and terms in comparision to consolidation through the Federal Governemnt. Be careful not to combine federal and private loans though. Federal loans usually have much better terms. Private loans are a whole different ballgame.

I discovered all of this after I graduated college and suddenly had to take a crash course in managing my evil student loans.