loan consolidation? now or later?

May 12, 2006 9:54 AM

LoanConsolidationFilter. I know this question has been asked before, but I can't find any information about my specific student loan cirucmstance. Please help! Should I consolidate in-school and lock in low rates? Ive been told i need to do it before July 1st or i cant consolidate in school anymore!

I am finishing graduate school in December of 2006, with a masters degree. (one year masters, jan - dec)

I just recently graduated in December 2005 with an undergraduate degree. I currently have about 35k in debt from undergraduate, and $7000 from this current semester. I will need to take out roughly $12,000 for next and final semester, and then I will be done.

The majority of my undergraduate debt (75%) is in federal direct loans of various types through my university, the remainder (25%) is private loans.

My graduate school debt is all federal loans.

Ive been told I should consolidate my loans before July 1st, 2006 - when the govt. removes a loophole making loan consolidation possible while in-school - also to take advantage of lower interest rates and everything else.
Will it consolidate my fall 2006 loans as well?

Finally, what consolidator should i go through? I seem to get barraged with info from every side. Ive heard good things about doing it through Dept of Ed or Sallie Mae.

Thanks again for answering. I know similiar questions have come up before, but I wanted to make very sure before i made an irreversible decision.

posted by jare2003 to education (7 comments total)

I think consolidating your loans in school means you don't get a grace period after you graduate - you must begin repaying immediately. I could be wrong - I'm not as clear as I should be on this topic. But if that grace period is important to you, make sure you ask about it before consolidating.
posted by amro at 11:18 AM on May 12, 2006

Ive heard good things about doing it through Dept of Ed or Sallie Mae.

Check previous threads on Sallie Mae. They do not have a good reputation.
posted by nakedcodemonkey at 11:41 AM on May 12, 2006

I've had the Dept. of Ed. for several years now, and they're great (especially in comparison to the things I've read about other lenders). No idea about when you can/can't consolidate, though.
posted by dilettante at 2:08 PM on May 12, 2006

I consolidated while in grad school before last July 31st to lock in the lower rates. I started repayment right away but then they gave me a deferrment...not sure why or how, but they did. I was still in school at that point and I think because I took out a loan for that Fall, they deferred me automatically. I am in the process now of consolidating last Fall's loan into my bigger consolidation loan that I did last Summer.

I used the Dept. of Ed's Direct Loan Servicing...you can do everything online and check the status.
posted by psususe at 8:06 PM on May 12, 2006

I consolidated while in grad school, though I was in repayment. Then I deferred it when I found out I could get a letter saying I was full time even though I wasn't taking classes anymore. I'm pretty sure I got a grace period both times I left deferment, but I don't think I was considered "In school" to the loan people.

Also Dept. of Education >> Sallie Mae.
posted by dirigibleman at 8:42 PM on May 12, 2006

Just as a heads-up (I work for a student loan guarantor in IT), you would need to consolidate before July 1, not July 31st as psususe said a few comments above.

The general feeling I've heard is that the rates aren't probalby going to be this low again for a while, and this is the only chance to consolidate them in-school (which was a very good deal). It also changes your loans from a variable rate to a fixed rate, so you know what it'll be over the life of the loan, which to me would be important.

I don't know of any negatives to consolidating now, other than taking a chance that the rates will be lower after you graduate, but really, the past year or two has seen the lowest rates there have been, so I'd think they will just go up and up (which people in the industry really think they will).
posted by ugf at 11:08 PM on May 12, 2006

Thanks for sharing this info.
posted by k8t at 2:49 PM on May 13, 2006