Student loans payments start soon. Looking for advice on where to consolidate

[Leros]

So your school didn't offer direct loans with the department of education.

The department of education is the lender of my loans and it is who is consolidated with.

You should consolidate with the department of education.

Nope. The process was basically:
- Here are the loans you are being offered (I only took federal loans)
- Check off the ones you want
- Choose a bank from this giant list.
- Done.

 

[DCal430]

Oops looks like you must already have a loan with the department of education to consolidate with them. Still avoid the big banks, do credit unions offer loan consolidation.

 

[dave_the_nerd]

Don't get on a 20 year plan to pay it back.

Why?

I had all federal Stafford loans, but was feeling the "ouch" of a high monthly payment. So I refinanced mine in 2009 after 4 years of paying, skating in just over the minimum ($20k in debt) to qualify for the 20 year plan. (My next payment would have dropped me below $20k forcing a ten-year repayment cycle, so I'm glad I refi'd when I did.)

Tripling your repayment term doesn't do much for saving on interest, but that loan debt is the cheapest debt I have by a long shot (4.25&#37 and my monthly payment is now less than what I spend on... well... a lot of things, actually. Definite improvement to quality of life and general stress level, and there's no early-payment penalty, so if I really felt like it, I could throw extra money at them and pay it off sooner.

To the OP: talk with a finance guy, figure out what your average yield on your investments and savings will probably be. That's your magic number. If you have debt at APR that's higher than that number, pay it off asap. Lower? Put the money in savings/investments instead.

Also, up to $2500 in student loan interest is tax deductible.

 

[edro]

These were federal loans. When you get loans through FAFSA, they ask you what bank you want to use. I used the same bank every year, but all my loans got sold (at least once each) and now I have various lenders to pay back instead of one bank.

And rates went up by more than double? Was I just lucky or something?

 

[DCal430]

Nope. The process was basically:
- Here are the loans you are being offered (I only took federal loans)
- Check off the ones you want
- Choose a bank from this giant list.
- Done.

Ah my school uses direct loans, so our loans are with and are serviced by the U.S department of education. Seems more simple too me, no need to choose a bank or anything. Everyone gets their loan through the government and pays the government back.

 

[ViviTheMage]

If you have a 0 EFC (Estimated Family Contribution) on your FAFSA you'll get a boatload of grants and loan money. I had extra money left over with the option to take more loans when I was in college because my EFC was so low...

That's what is fucked though, my parents never paid for anything for me when it came to school, but they made 160k~ together, so my EFC was huge...but parents didn't help at all. I think the system is a bit hosed, when it comes to the EFC crap. I am bitter about it.

Hmm... now I'm confused. I took a mix of subsidized and subsidized. I'm looking at the loans now and they are all 6.8%.

Shrug, that's what mine came up with ... 2%~ and 6%~ both were federal sub/unsub

 

[Leros]

vvvvvvvvvvvvvvvvvvvvvvvvvvvvvvv

http://www.loanconsolidation.ed.gov/

^^^^^^^^^^^^^^^^^^^^^^^

The rate you're consolidated at should be around 4% right now.

Doesn't look like it. From that site:

The interest rate for a Direct Consolidation Loan is the weighted average of the interest rates on the loans being consolidated (as of the date we receive the application), rounded to the nearest higher one-eighth of one percent.

So my average is 6.8%, rounded up to the nearest 1/8 is 6.875%. So my rate would go up?

 

[Leros]

Ah my school uses direct loans, so our loans are with and are serviced by the U.S department of education. Seems more simple too me, no need to choose a bank or anything. Everyone gets their loan through the government and pays the government back.

These are direct loans. Says so right on the papers they sent me. I guess they just contract the lending out.

 

[SunnyD]

Doesn't look like it. From that site:



So my average is 6.8%, rounded up to the nearest 1/8 is 6.875%. So my rate would go up?

When I did it (many moons ago), my rate went down significantly. That said, also take a look at the information regarding the "Special Loan Consolidation" program Obama has lined up starting January 1, 2012. That may be of benefit to you.

Keep in mind also that if you sent up automatic payments with Direct Loans, you get a % rate discount as well.

 

[ViviTheMage]

When I did it (many moons ago), my rate went down significantly. That said, also take a look at the information regarding the "Special Loan Consolidation" program Obama has lined up starting January 1, 2012. That may be of benefit to you.

Keep in mind also that if you sent up automatic payments with Direct Loans, you get a % rate discount as well.

That has the same stipend as the direct loan consolidation ... average of all of your loans %. It will not bring your interest rate down magically.

 

[GotIssues]

Also, up to $2500 in student loan interest is tax deductible.

It starts to get phased out at specific AGI levels that aren't all that high. If I'm not mistaken, it starts to phase out at $60k for single, $120k for married and gets completely eliminated at $80k and $160k, respectively.

 

[Leros]

When I did it (many moons ago), my rate went down significantly. That said, also take a look at the information regarding the "Special Loan Consolidation" program Obama has lined up starting January 1, 2012. That may be of benefit to you.

Keep in mind also that if you sent up automatic payments with Direct Loans, you get a % rate discount as well.

So I called them up. My interest rate would actually go up, but I would get a small discount for the automatic payment. It looks like I can get a better deal at a private bank.

 

[Gibson486]

What happened in 2006 that changed it? That's the last year I had student loans, thus never paid a lick of attention to it since then.

Anyways, at 6%+, you should pay that back as soon as possible (assuming you have no other higher interest debt like CCs and you have a job/steady income). Consolidating might not change your rate much, but even after the tax deduction, you are paying a fair amount of interest. Just make sure that you have some emergency cash just in case. 6 months worth of bills in cash, and dump everything else into paying off your loans. That's what I would do in your situation, at least.

I had ~$60k in loans that took me from undergrad through graduate school. However, it's at a miniscule 3%, so I'm not in a real hurry to pay that off.

At the beginning of 07/end of 06, the economy began to sputter and that whole housing issue began. No one wanted to loan money and lots of those consolidation companies just stopped. I had all these fliers and stuff from those companies advertising that they could consolidate all my private loans at 2-3% fixed. When I was about to graduate, I called them all and lots of them said they were no longer consolidating or that they closed.

Also, keep in mind that Obama has the student loan plan for next year. But from what i understand, it only covers federal loans (like stafford and no interest grant loans). Seriously, how do you get really in debt with just federal loans? You can only take out something like 5-7 grand a year with them. I do not think Obama really thought that plan through....

 

[TwiceOver]

Wow 6+% from Direct Loans? I'm at 2.6% with the auto withdraw system.

 

[Gibson486]

Wow 6+% from Direct Loans? I'm at 2.6% with the auto withdraw system.

Well...they do not even do that anymore. Rate reduction with automatic withdrawal.

 

[TwiceOver]

Well...they do not even do that anymore. Rate reduction with automatic withdrawal.

Wow. So people are really taking out student loans at that kind of rate these days?

 

[edro]

Well...they do not even do that anymore. Rate reduction with automatic withdrawal.

It is only .1% reduction.

 

[polarmystery]

I've got around $70k, rate is something like 5.5%. Graduated in 2006 when low rates seemed to vanish (got friends who graduated a year earlier with like 1-2% rates)

Yes, it sucks serious ass.

It starts to get phased out at specific AGI levels that aren't all that high. If I'm not mistaken, it starts to phase out at $60k for single, $120k for married and gets completely eliminated at $80k and $160k, respectively.

Yup. I make more than $60k and the $2500 tax deductible is slowly starting to evaporate. I think I was only able to deduct $2k last year.

 

[SunnyD]

It is only .1% reduction.

0.25% actually (or so it says on my DL servicing page).

 

[Gibson486]

Wow. So people are really taking out student loans at that kind of rate these days?

yup, luckily, only one of my loans is above 6%, the rest range from 2 to 4. People do not realize that they cut lots of federal funding for student aid starting in 06, so private loans were the only option aside from trying to find another cheaper school at the last minute. This why Harvard and MIT started the "if your family income is below 80k, you get your tuition knocked down to virtually nothing". Those schools had no other choice but to use their own personal funding to get those kids to attend. It's just sad that other schools did not follow that path and when federal aid was cut, they simply cut student aid packages of current students so they can have all the money go towards the new freshman class..

 

[Leros]

Wow. So people are really taking out student loans at that kind of rate these days?

It was that or not go to college. These were federal loans (not private).

So, my bank (Chase) doesn't do loan consolidations. The federal student loan site will actually raise my interest a bit. Does anybody have a good suggestion where to get my loans consolidated?