Hatrack River Forum: Someone had questions about consolidating student loans by 6/30

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Posted by Dagonee (Member # 5818) on :

This article explains why people are saying it's a good idea:

quote:
It's a good thing, because for the first time in five years, the interest rates on student loans will be going up. Effective July 1, the new variable rate on federally backed student loans will increase by 1.93 percentage points to 4.70 percent for in-school borrowers and those in their six-month grace period. The rate will also rise by 1.93 percentage points to 5.30 percent for borrowers currently in repayment. The rate on Parent PLUS loans will rise to 6.10 percent.

Students still in school who want to lock in the lower rates have to act before June 30. (And don't wait until June 30. Procrastinating could cost thousands of dollars over the life of the loan.) There is a downside to consolidating while you're still in school (you knew there had to be a catch). Typically, borrowers get a six-month grace period after graduation before they have to begin repaying. Consolidation eliminates the grace period.

However, even though students give up the grace period, they still won't have to start making payments until they leave school if they request an in-school deferment.

Marlene of San Diego asked, "What if you have all your loans with the same lender? Can you shop around for the best consolidation terms?"

Now the logical, free-market answer should be yes, right? But of course it's not that simple.

If all your loans are held by a single lender, you are required to consolidate with that lender. If your lender doesn't consolidate, or your loans are held by multiple lenders, only then can you shop around.

Posted by Eruve Nandiriel (Member # 5677) on :

So if I'm just starting school, does that mean I have no choice and I have to take the new rate?

Posted by Dagonee (Member # 5818) on :

I think so, but I'm not sure.

Posted by Jay (Member # 5786) on :

Sort of a different line, but I keep getting all these things in the mail talking about refinancing my student loans. I’ve already got a consolidated federal student loan. Seems to be a good rate. I never really think about it much. But I guess I should is there really that much different and better deals out there?

Posted by Dagonee (Member # 5818) on :

According to the article, if you've already consolidated, you can only consilidate again if you've got additional loans not part of the consolidation. Sorry.

Posted by Farmgirl (Member # 5567) on :

I just consolidated mine. Now if I can just make the payment..... [Smile]

Posted by Narnia (Member # 1071) on :

Thanks Dag, I was thinking of that thread and how I was going to email Eljay soon to ask her more.

I think I will consolidate because I will be in school over the summer, so I can defer, and then I'll start my job in September.

Posted by Dagonee (Member # 5818) on :

Aha, it was you!

The key lesson - be suspicious of anyone who tells you that you have to act NOW in matters of finance. But sometimes they're right. [Smile]

Good luck consolidating.

Posted by sarahdipity (Member # 3254) on :

hrm maybe I should consolidate. My stuff is deferred until the end of my grad school career. *ponder*

Ugh more money stuff to think about.