<p>So this may be a silly question but I was thinking.</p>
<p>The minimum monthly payment on Stafford loans is $50. What happens if someone has loans from different lenders. For instance my son's first lender was not doing loans the next year so he had a new lender for year 2. Now it is all direct loans so the new loan is through the school. So three separate loans from separate lenders. Is he going to have to pay the minimum $50 on each loan? If the 3 were together the total payment to repay in 10 years would be less than $150 a month.</p>
<p>Just curious if anyone knows.</p>
<p>Should you perhaps consolidate those loans? My son consolidated his Stafford loans. They were from the same lender but they were from undergrad and grad schools. He has ONE monthly payment, not two.</p>
<p>Not sure how consolidation works with subsidized loans as they are all different interest rates (6%, 5.6%, 4.5%). I think he wants to pay them off fairly quickly anyway. I was mostly curious. Having always heard the minimum $50 it just struck me that if loans are from different sources it must complicate things.</p>
<p>This is my understanding:</p>
<p>The payback is a minimum of $50 PER loan. If a student takes out 4 loans (one loan per year) then the payback is a minimum of $200.</p>
<p>Subsidized loans can be consolidated. You can pick and choose and some kids will consolidate the higher interest loans quickly. PLUS loans can be consolidated as well.
You have to look at the difference between the Stafford interest rate and the consolidation interest rate.<br>
You can only consolidate ONE time. So, if interest rates go down, you are stuck. A lot of kids get screwed (IMO) if they consolidate when rates are high - to get the longer payout and then rates decrease.
The variation in Stafford interest rates from year to year really burns me. My kids have a very wide variation in interest rates.</p>
<p>Regardless if you consolidate or not - all loans can be paid early with no penalty. Even if he consolidates - he can make extra payments and get rid of the loan early - perhaps with a lower interest rate.</p>
<p>Consolidation is also helpful if your Stafford’s originate with different lenders - you can make on monthly payment instead of two.
Now most colleges have gone to Direct Lending (Dept of Ed) so the upcoming classes may be dealing with a bank for one or two years and the Dept of Ed for their later loans. They should be counseled wisely to keep track of it all.</p>
<p>Actually, isn’t there a new thing that started last year? If you income is below a certain amount, your payment is based on your income. You can actually have NO payment if your income is below a certain amount. Of course, interest still accrues. If your income remains below that amount for 20 years (not a good thought) your loan would be canceled.</p>
<p>I can’t remember what this is called…but my son’s loan payment would have been very low. He has ONE loan payment…not six (he was in college for six years total undergrad and grad). If he had chosen the above option, it would have made his payment VERY low.</p>
<p>Thank you both.</p>
<p>I will have to have him look into consolidating the loans when the time comes. Looks like they weight the interest rates or something. And I think (if I am understanding this correctly) that if a student has one direct FFEL loan they can consolidate the others along with it. </p>
<p><a href=“http://loanconsolidation.ed.gov/borrower/beligible.html[/url]”>http://loanconsolidation.ed.gov/borrower/beligible.html</a></p>
<p><a href=“https://loanconsolidation.ed.gov/AppEntry/apply-online/appindex.jsp[/url]”>https://loanconsolidation.ed.gov/AppEntry/apply-online/appindex.jsp</a></p>
<p>One payment would certainly be easier to keep track of!</p>
<p>The government has a website about direct consolidation loans and it has a calculator to find out how much your interest rate is. It’s a weighted average based on the amount of your loans and their current interest rates:</p>
<p><a href=“https://loanconsolidation.ed.gov/AppEntry/apply-online/appindex.jsp[/url]”>https://loanconsolidation.ed.gov/AppEntry/apply-online/appindex.jsp</a></p>
<p>(Never mind, I see you found it.)</p>
<p>The program thumper is thinking of is called Income-Based Repayment. It is a new program that caps your loan payments at a certain percentage of your income (the rate is different for different income levels, but it ranges from 2.8% ($20K per year for a single person) to 12.6% ($100K per year for one person).</p>
<p>The threshold under which you would not have to pay money is very low. You have to be at or below 150% of the poverty line for your family size. For the 48 contiguous U.S., that amount is $16,245. So if your student makes less than that, then they would not have a payment.</p>