How to consolidate my student loans....

[mooseracing]

I have student loans through Sallie Mae like quite a few people, I just got a few letters from them for each loan and that payments start in July. I was planning on consolidating through them so I only have asingle loan to pay, or get a loan through the bank at a better interest rate and pay off sallie mae and just pay the bank.

Right now my Sallie Mae loans are ~8-10%, would i typically get a better rate consolidating through sallie mae, or would I be better off at a bank. I'm hesitant to go talk to a bank as they will try to sales pitch me.

What has been everyone's experiences?

 

[ViviTheMage]

go to a credit union, if you can.

They, well at least mine, are non-profit, so they dont try to sales pitch me.

 

[TheKub]

8%-10%? I consolidated late 06 and mine is at 5.3%.

 

[AmpedSilence]

Originally posted by: TheKub
8%-10%? I consolidated late 06 and mine is at 5.3%.

ha! I consolidated in '05 and my rate is at 3.37%!

 

[Beev]

Originally posted by: AmpedSilence

Originally posted by: TheKub
8%-10%? I consolidated late 06 and mine is at 5.3%.

ha! I consolidated in '05 and my rate is at 3.37%!

'04 and 1.66% baby!

 

[TheKub]

Originally posted by: Beev
'04 and 1.66% baby!

Depending on what time in '04 I wasn't even paying yet.

 

[AmpedSilence]

Originally posted by: Beev

Originally posted by: AmpedSilence

Originally posted by: TheKub
8%-10%? I consolidated late 06 and mine is at 5.3%.

ha! I consolidated in '05 and my rate is at 3.37%!

'04 and 1.66% baby!

If I hadn't gone to grad school, thats probably where i would be also!

 

[joutlaw]

Right now isn't the time to consolidate. I used to consolidate student loans from 2003-2005. It was the best time in the industry in the last 10-15 years. My wifes loans were consolidated at 2.77%.

If Sallie Mae is the only holder of your loans then they will be the only ones to be able to consolidate them. It's called the single lender rule.

If you have lonas through multiple lenders then you can consolidate through anyone you wish. Most companies will give you an incentive to go with them. i.e. our company Education Services Foundation would give you 2% off your loans if you conslidated through them, paid on time for a year, and did bank draft withdrawals.

I wouldn't consolidate right now though. The industry is in a mess and sort of reform. Interest rates should be much lower than they are.

The most important thing to know is... once you consolidate, you cannot consolidate again. You effectively would lock your loans in at 8% and if the student loan rates went to 3% again you would be out of luck.

Student loan interest rates are variable and change each July. That is why you can consolidate and lock in whatever rate is currently set.

 

[Xavier434]

OP, you need to call around and write down a bunch of numbers to figure out which lender is offering the best deal. There is no easy short cut.

I have a question for those who are more experienced though. If you have already consolidated your student loans, what kinds of options are out there to get a lower rate? For example, do they have something which basically involves a balance transfer? Are there other options?

 

[jarfykk]

For currently consolidated loans, not too many options really once you've consolidated. Can try calling the loan holder and asking if they can do anything about it. Otherwise, one idea is to go take an inexpensive course(s) at a local school and pay for it via a student loan (generally only for degree-seeking folks, but maybe a state school???). In the long run it might pay for itself.

I consolidated my various undergrad loans shortly after I finished my BS, then re-consolidated everything again after I completed my Master's....got it in right before the current "reforms" screwed up things, at least screwed them up for me. I'm told folks entering college right now do have some slightly cheaper loans, haven't paid much attention though.

 

[Special K]

Originally posted by: joutlaw


Student loan interest rates are variable and change each July. That is why you can consolidate and lock in whatever rate is currently set.

It depends on what type of loan you have. Federal Stafford loans dispersed before July 2006 have a rate that is based on the 91-day Tbill yield. These loans' rates reset once per year in July. They use the yield of the 91-day Tbill in mid-May to compute the new interest rate.

Stafford loans dispersed after July 2006 are at a fixed 6.8%, although this rate is set to drop down to 3.4% over the next few years. Note that this rate reduction only applies to undergrad loans.

Private loans usually change each quarter and are based on Prime, LIBOR, or the 91-day Tbill yields.

OP, it sounds like you have private loans - I don't know of any federal loan programs that have 10-13% interest rates. In that case, good luck finding any sort of consolidation deal that will actually lower that interest rate, as I don't think any exist.

 

[Special K]

Originally posted by: Beev

Originally posted by: AmpedSilence

Originally posted by: TheKub
8%-10%? I consolidated late 06 and mine is at 5.3%.

ha! I consolidated in '05 and my rate is at 3.37%!

'04 and 1.66% baby!

If you don't mind me asking, what type of loan did you have before consolidation? Did the consolidator offer you any incentives or bonuses that allowed you to get your rate down to 1.66%?

 

[brtspears2]

2005 - 2.625% , and sometime this year after 36 on time payments, it will reduce down to 1.625%. This is through Sallie Mae. I am in zero hurry to pay off the balance. The consolidation process was easy. I called them, they took down info, they sent me a package of forms, I signed them and sent them back. I only had federal unsubsidized loans.

 

[mooseracing]

Originally posted by: Special K
OP, it sounds like you have private loans - I don't know of any federal loan programs that have 10-13% interest rates. In that case, good luck finding any sort of consolidation deal that will actually lower that interest rate, as I don't think any exist.

Yep, it was my only choice. That why I was wondering if taking a loan out from a bank and using it to pay Sallie Mae is a resonable choice. Although I don't know what banks are offering.

Right now without any consolidating, its looking like a 500 dollar a month payment....ouch.

 

[Anubis]

Originally posted by: Special K

Originally posted by: Beev

Originally posted by: AmpedSilence

Originally posted by: TheKub
8%-10%? I consolidated late 06 and mine is at 5.3%.

ha! I consolidated in '05 and my rate is at 3.37%!

'04 and 1.66% baby!

If you don't mind me asking, what type of loan did you have before consolidation? Did the consolidator offer you any incentives or bonuses that allowed you to get your rate down to 1.66%?

mine didnt start that low but i got bonuses off for paying on time and doing direct withdrawl and all that mine are at about 1.8% now from 2004

 

[MetalMat]

Originally posted by: Beev

Originally posted by: AmpedSilence

Originally posted by: TheKub
8%-10%? I consolidated late 06 and mine is at 5.3%.

ha! I consolidated in '05 and my rate is at 3.37%!

'04 and 1.66% baby!

I consolidated in 05 and got around 2.5% I think. I know that if I continue to pay without missing payments it will get below 2% after a certain time. I am in no hurry to pay off that baby.

 

[Special K]

Originally posted by: Special K

Originally posted by: Beev

Originally posted by: AmpedSilence

Originally posted by: TheKub
8%-10%? I consolidated late 06 and mine is at 5.3%.

ha! I consolidated in '05 and my rate is at 3.37%!

'04 and 1.66% baby!

If you don't mind me asking, what type of loan did you have before consolidation? Did the consolidator offer you any incentives or bonuses that allowed you to get your rate down to 1.66%?

Bump - I'd still be curious to know how anyone was able to consolidate their loans at this low of a rate. What formula was used to calculate your loan's interest rate? Don't all stafford loans use the exact same formula?

If you look at the link here:

link

and scroll to the section titled "How are stafford loan rates set?", it says:

Each stafford loan product then adds a margin on top of that investment yield.
Stafford loans for students in school or in grace periods are T-Bill + 1.7%.
Stafford loans for graduates in repayment (for loans after July 1, 1998) are T-Bill + 2.3%.

So even if the Tbill yielded 0% (which never happened), then the interest rate of the loan would still be 2.3% at a minimum.

 

[RaistlinZ]

2004 here, 2.785%. I feel bad for people graduating now who are looking at 8-10% interest rates.

 

[Injury]

I have Sallie Mae and they automatically merged all of my loans into a single payment... not consolidation, but they take one payment a month apply them to all of my loans.

 

[Gibson486]

I am on the same boat. I have this one loan that is at 4% though....so when I consolidate, I have to factor that loan out.

I am not looking forward to paying my huge amount in loans

 

[Gibson486]

Originally posted by: mooseracing

Originally posted by: Special K
OP, it sounds like you have private loans - I don't know of any federal loan programs that have 10-13% interest rates. In that case, good luck finding any sort of consolidation deal that will actually lower that interest rate, as I don't think any exist.

Yep, it was my only choice. That why I was wondering if taking a loan out from a bank and using it to pay Sallie Mae is a resonable choice. Although I don't know what banks are offering.

Right now without any consolidating, its looking like a 500 dollar a month payment....ouch.

$500? I wish mine were that low

 

[Bignate603]

Originally posted by: Gibson486

Originally posted by: mooseracing

Originally posted by: Special K
OP, it sounds like you have private loans - I don't know of any federal loan programs that have 10-13% interest rates. In that case, good luck finding any sort of consolidation deal that will actually lower that interest rate, as I don't think any exist.

Yep, it was my only choice. That why I was wondering if taking a loan out from a bank and using it to pay Sallie Mae is a resonable choice. Although I don't know what banks are offering.

Right now without any consolidating, its looking like a 500 dollar a month payment....ouch.

$500? I wish mine were that low

Wow... I'm glad I got out with only $5k in loans. I pay $63 a month.