help! student loan consolidation.

[chillguru]

i call on you, oh LJ friends, because combined you are more experienced, wiser, and all around smarter than i

Comments

[nacht_musik]

I consolidated directly with the government, via the US Department of Education. It's worked out fine for me. It may lack some of the bells, whistles, and incentives provided by other consolidators, but on the other hand I know that they're seriously accountable to not screw me over, unlike private consolidators.

[beah]

I did the same, and the process was quite painless. There are some tricks, like if you agree to let them auto-deduct your payments from your checking account, you can get an additional discount, and if you always pay on time (which, of course, you do if they auto-deduct), you get another discount. But as I recall, the instructions were very clear, and it wasn't hard to do. Good luck!

[chillguru]

interesting. i wonder if i can go through the gov't. in some of my research i came across something that said if all of your loans are through the same lender than by law you have to consolidate through them. however, if they don;t offer student consolidation loans then you can go through outside sources.

what kind of student loans do you guys have? all of my are currently owned by the same bank, so i fear i may be locked into going with them.

[spitcurl]

I used to work for the Fin Aid office in college. I second the going directly with the USDE -- their process is far more transparent, and if hardships later on mean another deferment or forbearance, they are easy to deal with.

Be wary of the various options -- some of the lowest monthly payment options actually cost you 2-3X more in interest over the long term! Sounds nice early on, but not in 10 years when you want to save for other things. Ask for a chart of various payment plans to compare, to see which one gives the best ratio of interest rate vs. monthly payment vs. length of repayment.

[spitcurl]

You just don't want to end up paying back 2-3 times the interest, over the long term, that you would have w/o consolidating (that's a house downpayment, or a couple of cars right there). Or get locked into a 20-year repayment plan from which you have no escape. I have a poor friend who is locked into a plan for the majority of his remaining adult life, and has flat out said he can never afford to buy property.

The US Dept. of Ed has only about 4-5 different plans, and all of them are pretty easy to get information on, to compare side by side. And they may allow you to change your consolidation plan later on, which some lenders will not. There are mid-range options, still less than his individual payments now, which should still save you money without costing you too much over the long term.

Good luck on the search!

[dancingwolfgrrl]

I'm with everyone else: do it directly with the government. My financial aid office told me that even though commercial lenders' rates may look lower up front, they end up costing most students more because they'll immediately jack the rate up if you, like 95% of students, ever miss or are late on a payment.

[mzrowan]

I haven't had the experience of dealing with American student loans, but a general recommendation on paying back loans: check to see if the consolidator has a twice-a-month payment option (or even more frequent?). It doesn't make much difference to you or your bank account, but it makes a huge difference in the interest you pay over the long term.

[drwex]

There are lots of factors and, sadly, a lot of scammers out there. If you want to consolidate I'd suggest going to a lender you already know such as a bank or credit union you have dealt with and asking about what programs they offer.