Economy's effect on my debt
April 1, 2009 8:41 PM Subscribe
[LoanFilter] I have 20k in six Federal Stafford loans. Consolidate now?
I've read past posts, and most seem to lead towards consolidation. However, good friends have also deemed consolidation as death.
What's the deal? ? Obviously I want out from under financial debt ASAP and the current financial woes make me nervous. Thoughts?
I've read past posts, and most seem to lead towards consolidation. However, good friends have also deemed consolidation as death.
What's the deal? ? Obviously I want out from under financial debt ASAP and the current financial woes make me nervous. Thoughts?
Best answer: It might depend on when you incurred the loans, as stafford loans have had fixed interest rates since... 2006? 2007?
In that case, consolidation is more of a convenience than anything financially beneficial.
As I understand it, most loan consolidators/lenders have stopped really offering much in the way of "borrow benefits" i.e. if you pay on time for 36 months, we'll cut your interest rate by .25%
Just don't consolidate your stafford loans into private loans, make sure it's federal student loan consolidation!
posted by polexa at 1:00 AM on April 2, 2009
In that case, consolidation is more of a convenience than anything financially beneficial.
As I understand it, most loan consolidators/lenders have stopped really offering much in the way of "borrow benefits" i.e. if you pay on time for 36 months, we'll cut your interest rate by .25%
Just don't consolidate your stafford loans into private loans, make sure it's federal student loan consolidation!
posted by polexa at 1:00 AM on April 2, 2009
This thread is closed to new comments.
Consolidation can be good in the sense that it can reduce your monthly hassle from writing 6 checks into writing one - but if your loans are all with the feds, then maybe you only have to write one check anyway? Also, if you have a variety of interest rates, it is true that you would likely be getting a much better deal at least on the high rates. If it would be helpful to you, you may also be able to extend the repayment term to, say, 15 years.
One potential concern is getting stuck with a variable interest rate - they won't stay this low forever, and if you do still have many years left in your repayment plan, a variable rate may not actually be good for you (unless you can pay them all down in the next 2 years or so). Another issue is that your consolidation lender might have harsher late payment penalties or something to that effect.
If you live near your school, their financial aid office might be willing to help out an alum and you could drop by to talk to someone. They may even be willing to walk you through some options on the phone. I would be wary about taking advice from anyone associated with the consolidation lender as they'll have a bias towards selling you their product even if it's not best for you.
posted by rkent at 9:05 PM on April 1, 2009