<p>The calls and literature keep coming... Can someone explain the whys and hows? This is for a new '06 graduate who has just $5100 in Stafford loans. Will be going to graduate school at some point but not yet. At that time will need to borrow more. Thanks.</p>
<p>Bump. I'd like to know too.</p>
<p>My son consolidated his first two years of Staffords last May. It was to lock in the current rate before rate went up in the summer. I think he got around 2.8 and it went up to 4.5?
It essentially made his loans immediately due and payable, however since he is still in school he got a deferral (doesn't have to pay it off until he graduates) He will not get the 6 month grace period when he graduates however, he will have to start paying right away.
Some issues:
Hard to know who to go through as like you said there were many mailings and emails about it and hard to tell who was legit. He ended up going through his original lender which I think was easiest.</p>
<p>He received many confusing letters - his new loan was payable but deferred but he got mailings saying he had payments due. He actually received a payment schedule for the new loan the same day he got a letter saying the loan was deferred.</p>
<p>I think - that once you consolidate you cannot consolidate the same loans again? So if the rates go down you are stuck with whatever you consolidated at.</p>
<p>This is what I know but it is still confusing to me...anybody who can add more clarification is welcome to join in...I just read in the paper that the rates are supposed to go up again this summer?</p>
<p>Howdy folks,</p>
<pre><code> I was able to consolidate through my orginal lender, direct loans, and my student loans were cut about in half. They went from 41,000.00 to 19,000.00 or so.
The whole thing is to be organised and to keep your paperwork in order. It is nice if you learn about things through the original lender, keep on using this message board and speak to the financial aid advisor of your uni, and then call the original lender with any questions you might have and go from there.
If you are going through the William D. Ford Direct Loan program and whatnot, then it is all cool. You do not have to pay what is left while you are still studying hard in school. The thing is to make sure the company is legit. But, I have never heard of consolidating the same loans twice, but if you have any which did not get to be consolidated, then you could work on thsoe with a different company.
</code></pre>
<p>rlm919...You need to double check about this whole paying when you are freshly out of school thing. I have never heard of that. If things are crossing in the mail, that is no big deal because you can call the lender or set up an online account and e mail them on the quick. But, I really have never heard of loans being due when you are right out of school, that sounds weird and I would check it out.</p>
<p>Here is info from the AES website on consolidation(on the left of the page are lots of FAQs)
<a href="http://www.aessuccess.org/consolidate/%5B/url%5D">http://www.aessuccess.org/consolidate/</a></p>
<p>and here is the info regarding the grace period (the 4th item down):
<a href="http://www.aessuccess.org/consolidate/affect.shtml%5B/url%5D">http://www.aessuccess.org/consolidate/affect.shtml</a></p>
<p>But I looked up the Ford Loan program that you mentioned and you are correct, it actually states you still have a grace peroid. So I guess that is something to look for as well when you are researching who to go through...</p>
<p>The rules on consolidating your loans changed in March and then more rules will change in July but here is the deal:</p>
<p>Prior to March 31st if you consolidated your loans AND your loans were with the Ford Direct program any private lender could take this loans over for you and add extra benefits, like discounting the interest rate or giving you cash back on your principal balance. So you could re-consolidate an exiting consolidation loan if you went thru the right steps.</p>
<p>If you consolidated your loans and then you go out and get more education loans you can refinance all of these together into a new consolidation loan - you can do that now and that won't be changing.</p>
<p>If you haven't consolidated and all your loans are with the same lender you have to go to that lender to give you a consolidation loan - now the only problem with that is there may be other lenders out there offering better deals but due to a Single Lender Rule set up by the feds you are locked in and can't shop around!</p>
<p>If you loans are all currently with the William D Ford program you can still shop around and have someone else take these loans over so you can take advantage of some of the new extra benefits being offered out there-</p>
<p>AES is but one of many, many choice of sites and lenders to check out - another option is <a href="http://www.studentlendingworks.org%5B/url%5D">www.studentlendingworks.org</a> - there are some great deals that can save you thousands of dollars on your loans but act right now before July 1st changes take place.</p>
<p>Thank you very much for that site. I find consolidation very confusing and this site has a lot of useful info. My kids have loans at AES through their schools, so I figured that was the only place to go through for consolidation. I feel bad that I encouraged my son to consolidate last year (I believed the hype they were mailing us) and give up his grace period but at least he has a good rate for those first two years (2.8 I think)
The big thing is that in less than a month you cannot consolidate in-school anymore - then wait a year and they will change that again too...</p>
<p>There is one more little "catch' for you to consider - since you have already consolidated IF you get more education loans - no matter if your son gets Stafford or you may need to take out a PLUS loan - pick a different lender than the one you have been using - there is a Single Lender rule that basically says if all your loans are help by the same lender you HAVE to use that lender to consolidate even if someone else can offer you a better deal. If you insist on using a new lender for any new loans you get then when/if you decide to get a new consolidation loan to roll all your loans together you will then have the ability to shop around and pick any lender you want.</p>
<p>Getting an inschool consolidation wasn't such a bad idea because you locked in such a low rate - you are still entitled to deferring your payments while in school and you have a bunch of choices for repayment schedules that can also give you some time before you have to make princpal and interest payments - </p>
<p>Hope this helps?</p>
<p>Yes, thanks! I didn't know he could choose a different lender, he has one year to go, I wonder when he "chooses"?</p>
<p>When the school provides the "award" notice of your financial aid package - I believe at that time you will be offered a Stafford loan and possibly a PLUS loan. If you agree to either one of those you can then tell the school which lender you want to use. Sometimes the school will try to convince you to stay with the same lender, which is not such a bad thing - but on the back end of that it also limits your ability as a consumer to shop around for the best program and the best benefits you are entitled to?</p>
<p>This really confuses me as well...everyone keeps saying, consolidate! consolidate! or your interest rates will go way up! But I only have 1 loan so far, a Stafford loan, for $5500. I'm going to be taking out more for the 06-07 year and then I'll graduate. If I only have the one loan, there's nothing to consolidate, is there? Does this mean the interest rate on the loan I already have is going to go up? The only help I get from my parents is them saying, yeah I don't quite get that, look up information on it and explain it to us. =/</p>
<p>I'm a bit uncertain on this, as well. My son has a $3000 Perkins loan and a $2650 Stafford, but the Perkins has 5% interest, I believe. He will be getting more loans, but that's all he has so far. So I assume that consolidation would not apply to us. ?</p>
<p>Check out this thread:
<a href="http://talk.collegeconfidential.com/showthread.php?t=199508%5B/url%5D">http://talk.collegeconfidential.com/showthread.php?t=199508</a></p>
<p>Interesting article.</p>
<p>Okay, here's the deal - since you only have only have one loan and the balance is less than $10,000 I would say keep things where you are. The loan you have right now is a variable rate loan and will stay variable rate - so the rate will go up to 6.54 while you are inschool. If you get a new loan for the 06/07 school year you will get a fixed rate Stafford loan and the rate on that will be 6.8%. </p>
<p>So you end up with a varaible rate loan and fixed rate loan -- when you graduate you should then consolidate these into one big fixed rate loan- the fixed rate for the consolidation loan will be the average rate of all the loans you refinance together.</p>
<p>make sense now?</p>
<p>In the case of the Stafford and Perkins loans -if that is all you have and you don't think you will be getting more I would stay do not consolidate. </p>
<p>The Perkins loan is a fixed rate 5% loan that has a 9 month grace period after you graduate before you have to make the first payment. </p>
<p>The Stafford loan is a variable rate loan and has a 6 month grace period before the first payment is due. The rate on this loan will go up to 7.14 when it goes into repayment.</p>
<p>Botton line - if you have one loan or multiple loans and the total combined balance of those loans is more than $10,000 (this is just my opinion that if you have less other than fixing the interest rate consolidation doesn't really do anything for you) ---- it works to your advantage to consolidate that loan or loans so you can (1) lock down the interest rate; (2) take advantage of some of the extra benefits lenders are offering right now; (3) get a lower payment (if you need it). Always remember there are no prepayment penalties on these loans so if you get the maximum repayment term, i.e. the lowest possible payment you can always pay more when you have more to pay. That way you pay less interest and pay the loan off faster without obligating yourself to the higher payment - with the minimum payment you can always make that to keep your credit clear and your benefit intact.</p>
<p>Thanks! That helps. :)</p>