Join 3,524 readers in helping fund MetaFilter (Hide)

Can you spare some guidance for the hopelessly financially ignorant?
November 5, 2010 6:42 PM   Subscribe

Is it worth consolidating my student loans, and if so, how do I go about doing it effectively?

My student loans are coming due soon, and I used about twelve different lenders throughout my four years. Right now, I can think of nothing more appealing than having to deal with only one institution rather than these twelve and sending out one payment per month. But I am really financially uneducated, so I have a lot of questions about loan consolidation:

First, how do I find a reputable consolidation firm that won't blow up my interest rates, and does such a beast even exist? I've heard the government will consolidate certain loans, but have no idea how to start this process, or if I am eligible. Also, is it even worth it to consolidate? Does the answer to this question depend on how much debt I have?

Second, what are some institutions that any AskMeFi users have had positive experiences with?

Any advice you can throw me on this topic of student loan consolidation(I'm sure there are questions I didn't even know to ask) I would appreciate! Thank you.
posted by DeusExMegana to Work & Money (9 answers total) 9 users marked this as a favorite
I'm not sure who you should get your loan from, but ask how consolidation will affect your eligibility for income-based loan repayment. IBR is only available for people working in certain professions or at qualifying nonprofit organizations, but it's a lifesaver and some consolidation programs will kill your eligibility.
posted by crush-onastick at 6:45 PM on November 5, 2010

The federally administered Direct consolidation loan is the best way to go. It will likely reduce your interest rate, no fees, it will aggregate all student loans regardless of the original servicer, and the site walks you through the process. Bees knees.
posted by putzface_dickman at 7:11 PM on November 5, 2010

Private or federal?
posted by k8t at 7:39 PM on November 5, 2010

I consolidated with the Federal Direct system. In fact, a lot of people have exited that game between the finance crisis and new legislation, I'm not sure many are left.

In my case, the loans were variable, and consolidation would turn that into a fixed rate. At ridiculously low rates. 2.25 percent low. If you're a recent student though, I think they're all 6.8 percent fixed?
posted by pwnguin at 9:28 PM on November 5, 2010

Consolidation through the fed direct loan program is the best way to go. However, you can only consolidate your federal loans together - if you had private loans they must remain separate. The best way to check where all your federal loans are right now is by checking the National Student Loan Data System ( - you'll need to register a pin to get in. It sounds very worth consolidating since you have so many servicers. Just be aware your interest rates are going to be averaged (and will become a fixed rate). You can go to to get started.
One of the repayment plans you can choose in repayment is IBR which could help to reduce monthly payments and extend the time to have to repay - you will have to apply to qualify for this. They primarily look at how much income you/spouse have (job has nothing to do with this-unless you are trying to get the Public Service Loan Forgiveness Program-you need to work in a public service job).
I work in a financial aid office - I strongly suggest you speak to yours they can always give you some good advice!
posted by dayspteh at 9:47 PM on November 5, 2010

If you have loans through the federal government then consolidate them with the federal government. If you have any chance that you will ever work for a field where you can get your loans forgiven then you need to have them with the federal government. Otherwise, you can miss out on these forgiveness programs.

Even though I consolidated my loans years ago, you should know that they can sometimes be sold, in chunks. Several years ago I had only one student loan payment, now I have three because the original owner sold off part of my loan. I have no idea why, but since they dropped my interest rate about 7 percent when they sold the loan I wasn't really going to complain. Just thought it might be helpful to know. When my loans were first sold off I ignored the bills I was getting from Sallie Mae because I had never had a loan with Sallie Mae and had never done business with them. Well apparently they had my loans anyway.
posted by aetg at 10:14 PM on November 5, 2010

So, there's no hope for a person with, say, both a federal and a private loan to consolidate the two into something manageable?
posted by Thorzdad at 6:08 AM on November 6, 2010

There's recent legislation that takes the private loan servicers out of the equation. I'd be shocked if you can't consolidate federally serviced and privately serviced loans together now. It was never the private servicer's money anyway, that's why they're not called lenders.
posted by putzface_dickman at 6:19 AM on November 6, 2010

When you consolidate, you can certainly consolidate loans together that were federally serviced (by Direct Loans) and privately serviced (by a lender like Sallie Mae who handled the entire borrowing process) - so long as it was always federal money to begin with (so either a Federal subsidized or unsubsidized Stafford, Perkins or Graduate PLUS loan - I'm not sure if you can include a Parent PLUS loan with your other loans when you consolidate).

I wasn't clear when I said private loans can't be consolidated. What I meant by this is if you had a "Sallie Mae Education Loan" or "Bank of America Student Loan" or something to that effect -- these are the loans that cannot be consolidated because they were made solely by that lender and carry completely different rates and terms. If you go to NSLDS and do not see these loans, that's when you'll know for sure that those loans were not federal and will not count. But hopefully, you had mostly if not all federal loans!

I believe a few years ago, when there were more lenders out there, there were a few that were willing to consolidate federal and private loans together - but with the economic downturn and a lot of loan companies folding (I think the unlikely sounding numbers were about 2000 student loan lenders reduced to 7...seriously, it got nasty everywhere), as far as I know, Federal Direct Loans is the only source through which to consolidate and they of course will only do your federal loans.

One real downside to the consolidation which may cause some confusion too, is that when you consolidate with Direct Loans, they are almost definitely going to then give the loan to a private company to service for them. The current Direct Loan servicers are Sallie Mae, ACS, PHEAA, Nelnet and Great Lakes. So, you could have some loans with Sallie Mae and elsewhere and decide that for simplicity's sake (and to escape Sallie Mae), you could consolidate your loans...and then end up dealing with Sallie Mae as your servicer ANYWAYS. Sad, but true.

Again, I would be remiss to not suggest talking to someone at your school - they (hopefully!) can give you the most up-to-date information that's most relevant to your situation!
posted by dayspteh at 7:24 AM on November 6, 2010

« Older I need vegan men's work boots ...   |  I spent most of my childhood i... Newer »
This thread is closed to new comments.