<p>Is it a good idea to consolidate student loans? I received emails about consolidation from my college's financian aid office, and ed.gov (not spam). I quote from my school email:</p>
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Recent changes in legislation will no longer allow you to consolidate your student loans while you are still in school after June 30, 2006. </p>
<p>Federal Consolidation Loans at 4.7% interest rate (In-School rate) on student loans borrowed since 1998 are available to borrowers currently attending someuniversity. This interksest rate will rise to 6.8% on July 1, 2006. YOU MUST APPLY BEFORE JUNE 30, 2006 TO LOCK IN THE "IN-SCHOOL" INTEREST RATE of 4.7%. APPLY NOW while you are still in school.
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<p>loan consolidation is offered from the government, not some loan shark, so that I am not worried about this being a scam. However I do want to know if I should do this. Please advise.</p>
<p>I am a parent and not a financial expert but everything I've read in articles in The Wall Street Journal, Newsweek, USA Today, etc. recommends that students with outstanding federal loans strongly consider consolidating them before June 30, 2006. It takes some time to process the paperwork so I'd start investigating the procedures as soon as possible. Our daughter who is finishing up her junior year just completed consolidating her unsubsidized Stafford loans for her first three years at a 4.7% fixed rate. The only down-side is that she will be required to start making payments immediately after graduation and the six month grace period will be eliminated. It is my understanding that starting next year Stafford loans will be fixed rate with rates estimated to be about 6.7% for 2006-2007. I would suggest contacting the bank or other entity which administers your loans and ask them all the questions you can think of.</p>
<p>People will change banks for a 1/4% interest rate on their savings. A consolidation is giving you a 2.1% savings on interest and probably another 1.25% savings after she finishes college. This is a potential savings of approx 3.25% if you don't consolidate.</p>
<p>As for payback: Yes you will have to start an immediate repayment plan, but if you have PLUS or unsubsidized loans, then you should be already making payments, even if interest only.</p>
<p>This is not complicated. Don't worry the lenders are not going to lose money, only the taxpayer.</p>
<p>"This is a potential savings of approx 3.25% if you don't consolidate."</p>
<p>Typo. 3.25% if you DO consolidate. </p>
<p>Just like the DOE and the consolidators say. Call your loan people. several if you like.</p>
<p>The process will take +60 days (ours took 6 months) and you can say no at anytime. The process is simpler than a mortgage, has no fees, not hidden costs/fees, described in plain language, with a multitude of payment plans that can for the most part be changed at a later date.</p>
<p>I consolidated mine and my rates are a lot less than before. Plus you get a discount on your interest rate if you have the payment directly taken from your bank account, and if you make x amount of payments on time in a row you get another discount on your interest rate at that time.</p>
<p>I am not an expert - but I went through this situation recently and this is what I was told - keep in mind the rules change all the time -</p>
<p>-don't consolidate unless you no longer require federal loans (subsidized or unsubsidized) to cover educational expenses
-you can only consolidate your loans once, so any loan you take out after consolidation can't be added on or consolidated with any other loans
-the rules for deferrment and grace periods will change slightly and are less lenient that unconsolidated loans
-a couple times a year I get information insisting this is the last time rates will be this low (even though I already consolidated and there is nothing I can do!) </p>
<p>If the people who call and send information don't get commission I would be shocked because they act like sales people who do! That was my experience - and I ended up consolidating with the place recommended by my undergrad university and overall they were not nearly as pushy and took time to explain everything to me.</p>
<h1>10: we've consolidated in 2005 with one year left of 1st degree. We and he has taken more PLUS and unsubsidized Stafford for his last year. We are in the process of reconsolidation of these loans.</h1>
<p>On july 1, magsmom info is correct, as I led to believe. However, prior to July 1, you can consolidate while in school. You can then reconsolidate further loans but only after the completion of schooling.
You need to talk to Sallie, Nellie, or one of the bigger banks or DOE to get the true answer. Again you can always say no prior to finalization but remember you have until ~June 30 to get the application in.</p>
<p>^^ Yes - so from what I understood, if you consolidate before June 30th then you will not be able to reconsolidate additional loans taken out after this date? I think that might have been what they were telling me - I really don't understand finance stuff as much as I should - I just find the whole student loan thing overwhelming since I took out so many loans. One of my issues was I never knew that loans were bought and sold and lenders change etc -- I do think consolidating at the right time does save money - that is about all I am sure of!!!</p>
<p>If you have more than $10,000 in federal education loans, consolidation is really a great idea - you can lock down your interest rate (which is going up on July 1st), you can get a longer time to pay back the loan (however these are simply interest loans so you can pay them back anytime you want without any interest penalty), and you can still get options to defer payments if you go back to school. Oh, one more thing, the repayment terms are pretty flexible - you can pay back on graduated payment schedule (interest only for first 24mos), or level repayment (same payment until loan paid off) or you can even get an income contingent schedule.</p>
<p>Consolidation lenders are really agressive right now so one idea is to look for non-profit lenders who are doing more than just trying to get a loan from you - people are there to help you understand your options so you can make a good solid decision on what to do with your loans - check out <a href="http://www.studentlendingworks.org%5B/url%5D">www.studentlendingworks.org</a> - nonprofit in Ohio that has some pretty good benefits and once you earn the benefit you keep it for the life of the loan.</p>