Student Loan Consolidation

[mpweaver4]

I would like to consolidate 70K in private student loans. I hope a lower interest rate or a lengthened loan term will allow me to pay this thing off faster. The rate on my current 20 year loan is the one-month LIBOR + 2.75%. I've contacted StudentFirst and they offer what would be a very similar rate. They would lenthen the loan to a 30 year loan. I plan to pay much more than the minimum payment each month. SO, if the term is lengthened and the minimum monthly payment is reduced, can I pay this off faster assuming I am making large payments? Any advice and feedback is greatly appreciated!

[jIM_Ohio]

depends how much lower the interest rate is compated with the new loans. I would create an ammortization table or download one from the web to run the numbers yourself.

[noppenbd]

Lengthening the term is not going to help you pay it off faster. A lower interest rate and paying large monthly payments will. I would shop around and see if you can get a better interest rate. I would also consider getting a fixed rate if available.

[CreditExpert]

a lowe interest rate will help to pay off the loan faster only if you keep your repayment at the current amount. That way the capital portion gets paid off faster. Increasing the term is not going to help paying off faster, you will pay less, but for a longer period.

[mpweaver4]

Thanks. For whatever reason, I was thinking that if the term is lengthened, the amount of interest I pay monthly is decreased, so if I do make larger payments, more of that payment will be applied to the principal.

[InDebtInDC]

if the term is lengthened and the minimum monthly payment is reduced, can I pay this off faster assuming I am making large payments?

This question is hard to answer without seeing solid numbers, including your interest rate, the length of your periodic payments, how much you intend to pay, etc.

The fastest way to pay off a loan, lump sum payment notwithstanding, is to shorten the length of the loan to reduce interest.

Any advice and feedback is greatly appreciated!

I don't have quite as much student loan as you do, but I intend to draw out student loan payments for as long as possible for several reasons:

1) student loan interest is tax-deductible,
2) student loan interest is relatively low compared to other types of loan,
3) student loan payments may be deferred in periods of economic hardship or returning to school at least half time, or military/peace corp service, etc.
4) some employers offer student loan payoff as compensation,
5) federal subsidies if you have any,
6) there's a real chance that the next administration may help out people with student loans, depending of course who's in office.


Student loans would be my last priority. Focus on paying off all other debts first and start saving for retirement.