<p>I dont know if this is the appropiate place for this question, but I'm having trouble finding information on the subject. I have a variable rate student loan with sallie mae and since intrest rates are in the dumps my rate is currently very low at 5.25 percent. I was wondering if it was possible to consolidate my loan to a fixed intrest rate, since I figure intrest rates will be higher in the next several years. I've looked online and called several places but they either stopped offering student loan consolidations or offer intrest rates way higher than my rate is right now(lowest I've found is 8.8 percent).</p>
<p>You could have some difficulties. SM has not been overly cooperative in allowing consolidations outside their own company. And some other companies have not been willing to consolidate outside of theirs. For example Nelnet and SM have a reputation for not being helpful in attempts to consolidate outside their own venue.
And under Bush administration guidelines students are generally only allowed to consolidate once, which isn’t a situation which is such to encourage competition or rate shopping.
Right now in the SL market there isn’t a lot of competition or cooperation. In part because these companies do not have to accommodate clients and partially because they got their fingers burnt in the mortgage mess.<br>
Because of insider lobbying, and ironically government support and subsidy the SL industry is very different from other financial markets. Essentially until there is political change to reform the whole mess, the SL companies are enjoying the full deck. Unless you’re being driven by financial pressures to do so now, it might be better to wait until the new congress and president are sworn in and compelled to act.</p>
<p>jdm2008
Sallie Mae has formally announced they no longer allowing consolidations. Essentially you are bound to whatever they chose to do with your loan. If you try to consolidate with another company (even if you could find one still doing consolidations) they will probably block the consolidation process.
At most what they will do is allowed extended payments, which of course will increase the interest and principal substantially.
The core reality is that our alleged representatives have sold many who made the mistake, or had the need to borrow for their education down the river.
Unfortunate that an entire generation has been sold into a appalling debt bondage for the simple and admirable ambition to better themselves through education. But as long as companies of this type, are permitted to buy their influence and demand excessive payments from millions, they will hold all the cards. And don’t expect a fair hand in that game.
jdm, the best action that you can take, is to be part of a political hue and cry for reform, let people know what’s happening. It’s in some way already begun to affect your situation. Find out about those to whom the whole stacked situation has become impossible. And start contacting the representatives who’ve betrayed hopes and rights of an entire generation for some lobby money from corporate entities who never should have been let in the door. Perhaps just then, if enough take action, our congress just might get the idea to reign in the aggressive predators they themselves created and unleashed upon a entire generation.</p>
<p>I don’t think consolidation will be at most institutions in the future. I talked to banks, Wachovia was the last and they all said that wont be an option in the future. They did also say that many times students (like my nephew) were locked into a loan at a rate that in the future might not be the lowest and couldn’t get out of it. My girlfriend told me a couple of years ago, her son locked into a consolidation loan and then realized the following year, he could have gotten a much better rate. Nothing is perfect.
One good thing is the Stafford loan interest rates are going down the next few years. It wont help my son as much as my daughters, but anything lower is better.</p>
<p>Which is interesting insofar as the SL situation is one of the few financial situations wherein the option of refinancing has been effectively denied to the borrower. This started when their lobbyists demanded and got special privileges from the Bush appointees in the education department. Which wasn’t that hard as the Bush administration has stacked the policy making offices with people who have substantial ties to the large SL companies. Which unfortunately was the conceptual equivalent of staffing a womens shelter with Jack the Ripper. At first the special privileges were to only allow one consolidation, which was often difficult to do because it wasn’t in other companies interests to do so. Now since there have been some minor difficulties in the SL situation it has become a industry decision to essentially stop any attempts by student borrowers to gain a more favorable loan deal. And the recent congressional action to ‘save SL access’, had little to do with the end of really helping students or their families. Actually it was a massive cash transfer to already incredibly profitable companies. As noted in the Chronicle of Higher Education one of the consequences of that bill will be an expected 30+% control of the SL market for Sallie Mae. Which is one of the companies which has been incredibly influential in stopping the ability to consolidate student loans. A bit of a unfortunate pattern is obvious.
And many colleges are still using preferred lender lists which have nothing to do with favorable terms to student borrowers. And have everything to do with enhanced services provided to those institutions by some of the larger and more questionable lenders. In my state, despite the scandals attendant to this issue in the east, these type of deals are still common practice. Which means under current conditions, once students sign (trusting the college, and they unfortunately shouldn’t) they are essentially condemned to whatever unfavorable loan terms and company their school had sold them out to. And perhaps students and parents should know better, but they do trust schools. And the SL regulations and shell games are very complex, to the extent that only the people who set them up (for their own benefit obviously) really comprehend what’s happening. And that kind of shell game makes it very hard for ethical FA officers to operate. To speak too directly is difficult, and explaining the how these systems work, would be career suicide in academic politics. Those of us on the academic end may comment, but have limited means to really explain the problem. And although we’re a product of the academic system, even so some of the things which are happening are almost incomprehensible.
Quite true nothing is perfect. But what we have in the SL industry is no longer a system intended to aid students, families or even colleges. It has become a massive profit driven beast which crushes anyone and anything which doesn’t feed its maw. And unfortunately its now so pervasive that we consider it a normal state of activity.</p>
<p>Something to watch for, it can be a bit of a problem when some collegiate FA offices do not tell students that subsidized loans or direct federal loans are available. Which has been a problem at least since the 90’s and continues to be so despite recent disclosures about the issue.
The whole situation is problematic and the more so as more information comes out. And its getting out, even that ultimate academic establishment news source “The Chronicle of Higher Education” has begun to publish some disturbing revelations about the whole mess. What’s strange is how long its taking for the whole mess to brew up into a scandal or issue which engages more of those adversely affected by the whole situation.
It would make a good satirical essay about what our society says about the benefits of education compared to who actually benefits, if the whole situation wasn’t so detrimental.</p>