October 20, 2005

• The one useful thing that I can tell you is that you are only by law allowed to consolidate your federal student loans one time. Just about everyone does it once they have to start paying. I was no exception. Interest rates were considerably higher then than they are now. As such, I am stuck with monthly payments that are much higher than they would be now. As I understand it, interest rates are still relatively low. You will not have the opportunity to refinance later. If you feel the rates are going up and may not be this low for a long time, then you need to do it immediately. If you feel that the rates are going to come down at some point, then you might want to wait.
• When I refinanced a couple of years ago (interest rates were something like 4.2%), I did it with the feds here. Are your loans not all federal? I'm not so sure what is best in that case. I don't know the ins and outs, but all I did was lump my two stafford loans together and lock them into that low interest rate to be paid back in no more than 30 years. Maybe I'm forgetting, but it didn't seem like there were any sort of fees involved (other than that whole interest thing, of course).
• Here's one thing that will screw you over about consolidation, depending on how your loans are structured. Generally, must people have several seperate loans when they get out of school. (I know, duh, hence consolidation). I had about eight (grad and undergrad), some subsidized, some unsubsidized. So when I consolidated, I ended up with two big chunks. Now here's what I didn't know at the time. Student loan lenders, like many creditors, will offer you a lower pay off amount, if you want to retire the whole debt... especially if your repayment history has been quixotic (cough, cough). But in order to take advantage of this offer, you have to pay the entire amount. So whereas I would have been able to get rid of some of my smaller loans (less than $3k) on the rare occasions that I've some into bits of cash, now I am stuck with two large loans of which it will be highly unlikely that I can ever repay in one fell swoop. For instance, the smaller of my loans is $12k, but my loan company would take $9k to be done with me. Unfortunately, that's more than I could ever save or raise in my current circumstance.
• *Looks at student loan statement* *blinks* *pulls out knife* I graduated in '99, and thus far have never consolidated any of my student loans. It's something I've been pondering recently (as the interest has accrued substantially), yet I'm intrigued by the point you have brought up kimdog.
• My loans are all federal, and are all with the same lender. I thought I *had* to refinance to get my payments into some sort of managable size. The "normal" payments of my loan would eat up 1/3 of my (post-tax) paycheck. I could swing that if I never have any fun, any trips home or any emergency expenses. Is there any other way to lower the prices than consolidation? Though I really do feel like the interest rates are going up in the future, so I'm not terribly worried about getting stuck with a bad interest rate.
• Oh, so Mandyman, the site you linked is the one where I calculated what I would pay if I consolidated. I was just wondering if anyone else would give me a better deal. The interest rate now is 4.7%, and if I consolidate with the federal government, the rate only goes down to 4.5%. (And that's with the discount for automatic payments.) I thought I might get a lower interest rate with another lender, but too many of the lenders online look like crooks. *sigh* This whole thing makes me freak out. It makes my stomach hurt (ok -- it makes me want to throw up), and I probably need to sit down with some sort of expert who can tell me what to do.
• I had three lenders all of which I had notes for both subsidized and unsubsidized loans. I ended up consolidating them all with Citibank over a 20 year payback period ($38k total) for 4.5%. It's made my life *somewhat* easier. Now only if this F'in MBA pay itself back. Damn sunk costs...
• Actually, I should say damn liability as it will hang about my neck for years to come...
• If you've not already consolidated, look into the William D. Ford Direct Loan program through the U.S. Department of Education. They were lifesavers for me - they offer an income-contingent repayment plan, and that seems to be very unusual. I'm not sure what the eligibility requirements are now, though, and the website is not that great.
• Oops. On belatedly reading the earlier comments carefully, I now see that the link mandyman posted is the same program that I was gushing about. Still, the income-contingent thing is enormously helpful.
• According to a recent post here (which I can't be bothered to find) regarding the new budget cuts the Feds are making to pay for Katrina, those types of loans are gone. Everyone here who got one, consider yourself very lucky. I don't think they can change the interest rates, but I really don't know. Hope not. I'm currently forebearing, which means I accrue an extra $900 worth of interest to not pay on them for an extra year. Wheee!