Student loan help needed
September 14, 2010 3:11 PM Subscribe
I've defaulted on a student loan, and I'm delinquent on the other. A collection agency has contacted me and would like to consolidate both loans. How should I proceed?
I'm a recent college grad, but I've been unemployed for a while, and I've been avoiding my student loan collectors for that time. One of my loans has defaulted, and the other (with Direct Loans) is fortunately still just delinquent. I'd like to finally fix this situation, but I'm not sure what the best course of action is.
From what I can tell, the university turned my defaulted loan over to a collection agency. They've contacted me and sent me some paperwork to consolidate my two loans so that they're both with Direct Loans.
I don't really know what kind of recourse I have with this loan that's in default, so this seems like my only option that the moment. It seems fine though. My interest rate might be perhaps a tad higher, but it will pull that loan out of default and transfer it to Direct Loans, who seem to have a good reputation in these matters. That is, my deferment/forgiveness options remain the same, and my interest rates will not change much: the rate on the consolidated loan will be a weighted average of the two loans, rounded up to the nearest 1/8 of a percent. (Say, 15k at 5% and 20k at 6% will result in a 35k loan at 5.625%).
So does this sound like a good idea? Any advice from those who have consolidated with Direct Loans?
I'm a recent college grad, but I've been unemployed for a while, and I've been avoiding my student loan collectors for that time. One of my loans has defaulted, and the other (with Direct Loans) is fortunately still just delinquent. I'd like to finally fix this situation, but I'm not sure what the best course of action is.
From what I can tell, the university turned my defaulted loan over to a collection agency. They've contacted me and sent me some paperwork to consolidate my two loans so that they're both with Direct Loans.
I don't really know what kind of recourse I have with this loan that's in default, so this seems like my only option that the moment. It seems fine though. My interest rate might be perhaps a tad higher, but it will pull that loan out of default and transfer it to Direct Loans, who seem to have a good reputation in these matters. That is, my deferment/forgiveness options remain the same, and my interest rates will not change much: the rate on the consolidated loan will be a weighted average of the two loans, rounded up to the nearest 1/8 of a percent. (Say, 15k at 5% and 20k at 6% will result in a 35k loan at 5.625%).
So does this sound like a good idea? Any advice from those who have consolidated with Direct Loans?
Using a loan calculator can help with comparing numbers.
Final cost of 15k at 5% over ten years: $19091
Final cost of 20k at 6% over ten years: $26644
The total cost of individual loans is: 19091 + 26644 = $45735.
Final cost of 35k at 5.625 over ten years: $45841
If the terms are correct, this seems comparable.
posted by Blazecock Pileon at 3:29 PM on September 14, 2010
Final cost of 15k at 5% over ten years: $19091
Final cost of 20k at 6% over ten years: $26644
The total cost of individual loans is: 19091 + 26644 = $45735.
Final cost of 35k at 5.625 over ten years: $45841
If the terms are correct, this seems comparable.
posted by Blazecock Pileon at 3:29 PM on September 14, 2010
It was a long time ago, so this might not work again. I ignored my student loan, only about $20K, for three years. When the collection agency called, I offered half immediately, for forgiveness of the entire debt, and they went for it.
posted by StickyCarpet at 4:03 PM on September 14, 2010
posted by StickyCarpet at 4:03 PM on September 14, 2010
If you can consolidate through Direct Loans, deal with them and skip the agency. I went through the process with the help of their ombudsman office; I'll see if I can find the link.
posted by SMPA at 5:17 PM on September 14, 2010
posted by SMPA at 5:17 PM on September 14, 2010
I consolidated with direct loans years ago, and have been very happy with them. Did the same income-contingent payment thing, and the payments have stayed very manageable since.
posted by M.C. Lo-Carb! at 5:19 PM on September 14, 2010
posted by M.C. Lo-Carb! at 5:19 PM on September 14, 2010
Go here. You shouldn't need to deal with the agency at all, from what I remember. I assume that you have a Perkins loan, since you mention your school.
By the way, you won't actually have to go through the ombudsman; my situation was more complicated than yours sounds like. That's just the link I've got saved.
posted by SMPA at 5:26 PM on September 14, 2010 [1 favorite]
By the way, you won't actually have to go through the ombudsman; my situation was more complicated than yours sounds like. That's just the link I've got saved.
posted by SMPA at 5:26 PM on September 14, 2010 [1 favorite]
This thread is closed to new comments.
I'd also have to allow this collection agency to monitor the status of my loan and presumably take whatever measures they can to ensure I'm paying it.
posted by Team of Scientists at 3:24 PM on September 14, 2010