<p>It's graduation time, and I was a very happy and proud parent last week as I watched my daughter march across the stage to collect her bachelor's degree. Four years flew by! But now the e-mails are starting to arrive, and it's time to pay the piper. I'm hoping some knowledgeable folks will help with my questions.</p>
<p>First off, what are the pros and cons of consolidating? My daughter has three separate unsubsidized Staffords. I read online not to consolidate if any of the interest rates are lower than what you would get by consolidating. In my daughter's case, I think all the interest rates are 8.5%, but I'll double-check. If the interest rates match, should she consolidate?</p>
<p>Second, my daughter is getting e-mails that say, pretty much, "Hi! We have taken over the servicing on your loan. So go to this or that website and sign in." Should she believe these people? I think it would be nice to hear from the original servicer, but that hasn't happened yet, to my knowledge. </p>
<p>Third, is there any strategy for paying off the loans earlier? Can my daughter just double up on payments, for instance, or does she have to specify what the extra money is for? </p>
<p>Any help would be much appreciated!</p>
<p>Ask your D if she had any exit meeting. My S went to a meeting for seniors (it was mandatory for anyone with loans) and they gave him all kinds of printouts and booklets about his loans. His appear to all have be with one service now and they are all at lower rates than if he consolidates. I haven’t read the entire booklet but it had examples of how to approach them and what-if scenarios. If he consolidates it moves to alittle over 8%. Not sure if all colleges have this senior service but what my S gave me (right after commencement - great timing) is valuable information. We decided to set up a separate bank account that both he and my H and I will contribute to and put the payments on autopay (not consolidating them) which will knock alittle bit off the percentage in the process.</p>
<p>I’m confused. If they are unsub Staffords taken out in the last 4 years isn’t the interest rate 6.8% on all of them?</p>
<p>When I looked into consolidating for my son (his are subsidized so do have differing interest rates) my understanding was that the differing interest rates are taken into account when consolidating the loans. We ran some numbers and the interest rate for consolidation would have been an average of the 2 rates on his loans. </p>
<p>The benefit would be making only one payment a month. In the end my son did not consolidate (because he procrastinated and did not get round to it). He is paying quite a bit more each month to try and get them paid down quicker. My husband and I spent some time on the phone trying to convince him to put all the extra payments to the higher interest rate loan till that is paid off. Not sure if our advice has “taken” yet. It usually takes him awhile to mull our advice over before he decides we might know what we are talking about.</p>
<p>Interesting…I’ll have to go on-line and look at the individual loans. The college gave him a printout from the National Student Loan Data System and there were different rates. He has 2 small subsidized the year(s) that I was unemployed and the rest are unsubsidized. I remember in 2007 he did “choose” his loans as there were a couple options for unsubsidized. I just pulled out the paperwork and I do see that it says consolidation is the weighted average of the interest rates on all of the loans rounded up to the nearest one-eighth of 1% and not to exceed 8.25%. I’ll have to do more homework, read more critically and crunch the neighbors I guess before we dismiss consolidation. Oh joy.</p>