Student Loan Consolidation

[JM Aggie08]

The day my student loans kick in is rapidly approaching, and I have a HUGE question that hopefully someone/multiple people can help answer.

Consolidation v. Paying individually?

Currently, the bulk of my debt is in federal loans, which are going to accrue interest like a motherfucker after 8-10 years. That being said, my outside loans (from large banks) will be even worse.

Knowing this, what would be my best option in this situation? I want to pay them off ASAP with as little interest as possible, but at the same time do not want to cramp my lifestyle entirely too much.

 

[Rumpltzer]

When I did this (years ago), I went with the federal Direct Loan Consolidation:
https://loanconsolidation.ed.gov/AppEntry/apply-online/appindex.jsp

I used a tool like this to enter my loans:
https://loanconsolidation.ed.gov/loancalc/servlet/Controller?controller_task=startCalculator

You can choose which of your loans you want to include in the consolidation. I had some smaller (less than $2K) private loans with higher rates (~8%) that I did not consolidate because they brought up my rate overall rate. I paid off the large interest rate loans individually (in less than a year).

The consolidation was pretty easy, and I locked in a decent rate (3%). I pay an extra 20% every month to get it done sooner.

Most of my loans were federal.

 

[Rumpltzer]

Also, they gave me an extra 0.25% break on the rate after a full year of no late payments using the electronic debit feature. My original rate was 3.25%.

Looks like they still offer this sort of incentive.

 

[Wreckem]

Consolidate all of your federal loans with a Federal Direct Consolidation.

Consolidate all of your private loans with the bank with the cheapest Private Consolidation loan.

You will aren't likely to get anything less than 6.55% on the federal loans, and getting that 6.5% will require you to have auto draft set up.

 

[Imported]

6.55 on federal loans? Holy crap.. Mine was like 2%.

 

[Destiny]

My student loan interest rate is lower than any student, bank, or federal loan consolidation currently offered... I feel bad for anyone having to pay more than 3% on their student loans... mines is sitting at only 2% too and will be paid of this year - only took me 10 years...D:

 

[Corporate Thug]

Consolidate all of your federal loans with a Federal Direct Consolidation.

Consolidate all of your private loans with the bank with the cheapest Private Consolidation loan.

You will aren't likely to get anything less than 6.55% on the federal loans, and getting that 6.5% will require you to have auto draft set up.

This is the way I would go. I was locked in at 6.5% I believe that they knocked off .25% for auto draft and .25% for making 6 (I think it was 6) consecutive payments, making it 6%.

 

[Corporate Thug]

My student loan interest rate is lower than any student, bank, or federal loan consolidation currently offered... I feel bad for anyone having to pay more than 3% on their student loans... mines is sitting at only 2% too and will be paid of this year - only took me 10 years...D:

The reality is that most all federal loans will lock in at near 6%. Private loans are a little less (usually around 5%). That's what they go for these days. I'm not sure where you guys got 2% loans or how long about that was.

 

[Wreckem]

The reality is that most all federal loans will lock in at near 6%. Private loans are a little less (usually around 5%). That's what they go for these days. I'm not sure where you guys got 2% loans or how long about that was.

Their loans were prior to 2006 IIRC.

 

[Wreckem]

This is the way I would go. I was locked in at 6.5% I believe that they knocked off .25% for auto draft and .25% for making 6 (I think it was 6) consecutive payments, making it 6%.

When did you consolidate?

Standard direct loans have 6.8% interest and unless they are running a special for lack of a better word there is typically only the .25% reduction for auto debit. They were doing "special" consolidated loans up until recently that allowed .25% reduction for consolidating and .25% reduction for auto debit

The student loan interest rate calculator says I'll have a 7.5% interest rate(unsub/sub direct and direct consolidation, and grad plus loans), 7.25% if I have auto debit.

 

[Gibson486]

pre 2006, consolidating was the way to go. You could consolidate private loans below 3% and federal loans at 2%. That changed in 06. Now, consolidating loans is tough (most companies, even Sallie Mae, will not even let you do it) and it can actually be a sign of stupidity in some cases.

 

[Corporate Thug]

When did you consolidate?

Standard direct loans have 6.8% interest and unless they are running a special for lack of a better word there is typically only the .25% reduction for auto debit. They were doing "special" consolidated loans up until recently that allowed .25% reduction for consolidating and .25% reduction for auto debit

The student loan interest rate calculator says I'll have a 7.5% interest rate(unsub/sub direct and direct consolidation, and grad plus loans), 7.25% if I have auto debit.

Doesn't consolidation now take the weighted average of your loans? 6.8 sounds about right though.

 

[Wreckem]

Doesn't consolidation now take the weighted average of your loans? 6.8 sounds about right though.

If you were eligible for the reduced rates the past few years that formula might get the loans to lower than 6.8%. I graduated undergrad before those started and they dont apply to loans for graduate school.

Mine are straight up 6.8% direct loans and 7.9% grad plus loans. That is why it quotes me 7.5%. Oh well PSLF FTW.

 

[Wreckem]

pre 2006, consolidating was the way to go. You could consolidate private loans below 3% and federal loans at 2%. That changed in 06. Now, consolidating loans is tough (most companies, even Sallie Mae, will not even let you do it) and it can actually be a sign of stupidity in some cases.

Unless you can make the minimum payment on over a dozen separate loans, consolidation is still the way to go for federally backed loans.

And federal loans can only be federally consolidated.

 

[Franz316]

My federal consolidation is at 5.5 and I graduated in 09. It seems a bit high but I'll manage. It is a whole lot more simple than making 8 individual payments.

 

[JM Aggie08]

I apprecite all of the great responses everyone.

10 years from now I'll try to pretend that it never had to happen

 

[onza]

F'n interest rates are stupid high for school goers these days. I grad'd in 06 and they were in the 2-3% range.

 

[JM Aggie08]

F'n interest rates are stupid high for school goers these days. I grad'd in 06 and they were in the 2-3% range.

Lookin' at 5.625% consolidated for myself

 

[Saint Nick]

I just paid off about $3000 worth of private loans over the past couple months. Only $2000 left on a subsidized loan... Can't wait

 

[joutlaw]

F'n interest rates are stupid high for school goers these days. I grad'd in 06 and they were in the 2-3% range.

Yep... government took over the student loans completely. No reason to lower rates if there is no competition.

When I worked in the industry, rates were 2.77%. We offered incentives to consolidate with us up to 1% off that.

 

[Vdubchaos]

Ahh Student loans......that and Car loans are up next on the chopping block. Just like mortgages Banks LOVE to give these away hehe

We are at a point where College is no different from buying a car or a house.

If you cannot afford it, don't do it.

Sad part is no body really knows if they WILL be able to afford it or not.....

 

[terry107]

Lookin' at 5.625% consolidated for myself

Judging by your location and user name, we went to the same school. My loans were consolidated at a similar rate.

 

[Wreckem]

F'n interest rates are stupid high for school goers these days. I grad'd in 06 and they were in the 2-3% range.

The people who go screwed the most, are people like me, who only had undergrad loans from Fall 2006 to Spring 2009.

The 09-10 school year had 5.6, 10-11 4.5, 11-12, 3.4 and 3.4 was renewed for one year for next year.

Graduate loans(which I have since taken since 2009) were still pegged to 6.8.

 

[JM Aggie08]

Felt the need to bring this thread back to get a more concrete answer - as far as my outside (Wells Fargo and Chase) loans go, should I refinance both of them together through another bank with a lower interest rate?

November is rapidly approaching :'(

 

[EagleKeeper]

Lower rates is usually better on the wallet.