Consolidating student loans

**humandraydel** · 02-25-2007, 06:24 PM

Re: Consolidating student loans

I could be wrong, but I don't think you can consolidate while you are in school.

**jIM_Ohio** · 02-25-2007, 06:39 PM

Re: Consolidating student loans

Originally posted by bdizzle

I'm 24 and a junior in college. I've never consolidated a loan before, but I heard interest rates are going up. I wanna make sure I get the lowest rate possible so that I can pay it off ASAP. So I have a few questions

Where can I find out what the current rate is?
Where can I find out what the rates will be next year?
What company should I consolidate with?

I was searching for the questions online, but I kept getting sites offering to consolidate with, but no real info.

hanks

I would wait and mull over your options. When I graduated in 97, many places advertised they could drop my rate in half, consolidate all my debt (subsidized and unsubdized loans). In reading the fine print, these offers were extending my repayment from 10 years to either 20 or 30 (which would have cost me more in the long run).

In addition, whoever is telling you rates are going up is speculating. Rates may go up, they may go down. Last week they went down .125% for mortgages. Then they went back up .125% the same week.

**bdizzle** · 02-26-2007, 12:18 AM

Re: Consolidating student loans

Originally posted by humandraydel

I could be wrong, but I don't think you can consolidate while you are in school.

I'm not sure about that. A friend of mine told me she consolidated her loans recently, and she was still in school. Then again it was her senior year so they may have worked something out. I'll ask her I guess.

**jIM_Ohio** · 02-26-2007, 11:38 AM

Re: Consolidating student loans

You can only consolidate once, so timing is important. My suggestion is to WAIT. If inflation stays away, I don't see rates going up (fed usually raises rates to combat inflation).

At same time if economy collapses, rates will be lowered (in this case, consolidate).

If you are Junior, I'd say it's 33%-33%-33% right now. 33% chance rates go up, 33% chance they stay the same, 33% chance they go down. 66% of this favorable to you to WAIT.

Are you paying interest on the loans now?

**bdizzle** · 02-27-2007, 07:40 AM

Re: Consolidating student loans

Right not everything is deferred. there's 2 lendeers both have subsudized and unsub'ed loans.

Stafford Loan 1 - $14,501 6.504%/6.80% (subsidized/unsubsidized)
Stafford Loan 2 - $13,250 6.540%/6.540% (subsidized/unsubsidized)

I should be done with school in 2008-2009, so repayment should be right around the corner. I'm a pretty agressive saver, and if things work out the way I'm hoping, I should have at least half paid off by the time I graduate. And the rest in another year or two. Those rates seem high to me, but I don't know very much about what the rates are these days.

**jIM_Ohio** · 02-27-2007, 08:07 AM

Re: Consolidating student loans

Originally posted by bdizzle

Right not everything is deferred. there's 2 lendeers both have subsudized and unsub'ed loans.

Stafford Loan 1 - $14,501 6.504%/6.80% (subsidized/unsubsidized)
Stafford Loan 2 - $13,250 6.540%/6.540% (subsidized/unsubsidized)

I should be done with school in 2008-2009, so repayment should be right around the corner. I'm a pretty agressive saver, and if things work out the way I'm hoping, I should have at least half paid off by the time I graduate. And the rest in another year or two. Those rates seem high to me, but I don't know very much about what the rates are these days.

The fact you have subsidized and unsubsidized loans makes sense to wait. Once you combine these two types into a single loan, they cannot be seperated. Meaning it's tough to pay off the smaller pieces and reduce payment size on the consolidated loan... and no reason to make a decision today which cannot be undone, which may impact you now negatively.

You suggest you have 27k in student loans. If 6k of this is subsidized, you have ~21k of unsubsidized loans now with a payment of ~$119/month for interest (right now).

If you consolidated, all would be unsubsidized, meaning the interest only payment on 27k would be ~$153/month. This assumes same interest rate before and after, and a repayment period of 10 years.

I might suggest posting your numbers to a loan calculator.

I found it easier to pay off my loans keeping them seperate. Each of my loans looks about the same size as yours (my tuition was between 12k-16k a year for 5 years). Interest rates at the time were around 6.25%.

6.25% is cheap money... consider your student loans an investment in your future (to secure higher earning power in the future).

I'd wait to see your first job and the "local issues" you'll face. For example, I wanted to move into a house within 3 years of my first job, and one of the things I needed to do was pay off some of my debt (close the accounts) for the mortgage ratios (front end/back end). It was much easier to close the accounts if student loans were seperate, and the payment difference between 6.25% unconsolidated and 4% consolidated did not come close to the satisfaction of having my first house.

One other point, some banks won't touch the unsubsized loans... I had some discussions with banks on consolidating, it just didn't make sense to only consolidate "some" of my loans.

Consolidating student loans