Consolodating student loans

May 31, 2006 4:24 AM

Student Loan Question. I know it has been asked several times in the past month on askmefi, but i do not believe my specific question has been addressed...

I am currently in school and have another 4-5 semesters before graduation. I have a minimal amount of borrowed money (5-6k) and would like to consolodate before the interest rate hike. What i am curious about is whether consolodating my loans right now will force me to start making payments right now. I dont have the money to make payments right now, but also dont want to pay the additional interest that will accrue if i do no consolodate. I feel like my government has abandoned me....again Ideas? Suggestions?

posted by I_am_jesus to education (18 comments total)

Not exactly the same situation, but I consolidated while in my grace period, paid for a couple months after, then went back to school. Having consolidated had no effect on the in-school grace period.
posted by ferociouskitty at 4:27 AM on May 31, 2006

Forgive the obvious question, but have you checked with your school's financial aid office or the holder of your loan?
posted by Sweetie Darling at 4:50 AM on May 31, 2006

have you checked with your school's financial aid office or the holder of your loan?

i have called over there once, and emailed them once. When i called the girl that answered didnt know that there were going to be rate hikes (presumably a work study student they have answering phones). The email was responded to with a link to the Schools financial Aid website, which i have thoroughly scoured already.

As far as the holder of the loan...that would be the government, and i would have no idea where i would even start trying to contact them (i would probably be on hold until the rates went up anyway).
posted by I_am_jesus at 5:00 AM on May 31, 2006

Call the consolidators. The people at NextStudent were incredibly helpful to me.
posted by footnote at 5:20 AM on May 31, 2006

Go talk to a financial aid counselor in the office, they are paid to know the answers to these questions and are advocates for you, not the loaners of the money.

That said, I believe you can not consolidate while you are still in school, at least through the federal government. I think I remember looking into the same kind of thing in my undergrad, not being able to do it and now that I'm in my Master's program I'm unable to utilize federal consolidation for my government backed loans.

Private consolidation loans are a whole other story and will require credit checks and possible cosigners. They may also have rates that are higher now than the federally backed loans will have down the road. Going private, you will also lose federal subsidies on interest if you have subsidized loans and your repayment options will not be as flexible. In general, you want to keep your federal student loans within the federal system. Private student loans are not as good a deal as they sound, while the federal ones are.
posted by spaghetti at 5:20 AM on May 31, 2006

That said, I believe you can not consolidate while you are still in school

Man, this situation is kind of crappy. Not so much for me...since i dont have much money borrowed, but for all the people that borrow the full amount of thier education. Wouldnt one think that the government would be more helpful to those of us who pursue higher education? and try to make money elsewhere (or perhaps i jsut dont understand the situation).

Anyway, thanks for the help guys/gals.
posted by I_am_jesus at 5:36 AM on May 31, 2006

If you have a federal student loan, try poking around here. My direct student loan isn't fixed and I get a letter every six months with the new rate. The maximum is fixed by Congress, but it was pretty sweet for a few years when interest rates were low and I got much lower rates.
posted by birdherder at 5:37 AM on May 31, 2006

I_am: with the small amount of money you have borrowed the payment for just the interest each month would be very very low. I would suggest you consolidate now, and then pay as much money as possible each month. The longer you let the juice run the more you will end up paying.

I owe about 15k and my monthly payments is about 200 bucks (i pay about 300 bucks to get ahead of the interest) for you i imagine it would be in the 100 buck area.

Eat less, go to the movies less, whatever you have to do, just pay off that debt as soon as possible. Or join AmeriCorps and after one year of service they will give you 5k to pay off your student loans, and you will get a great resume booster. I did two years and paid off about 10k of my loans. It was grand, they also put your loans in deferment (and pay your interest) for one year.
posted by stilgar at 5:53 AM on May 31, 2006

I consolidated my Stafford loans through Access Group, the company that had been servicing each year's loan. I was specifically told that although I needed to apply for the consolidation before July 1, I could ask them to not process the application until the expiration of my grace period in November. I would still get the rate that was in place before the July increase. Best of both worlds, essentially. Ask your financial aid office specifically about this option, and if they continue to be useless, call the company directly.
(YMMV, since I am a graduate student.)
posted by Saucy Intruder at 5:55 AM on May 31, 2006

I think you can consolidate all govt loans except the perkins. I did it last year. My loans are subsidized, so i'm not sure how it changes unsub'd loans, but as far as I know, my grace period stayed the same for all but one loan, from the state. If you call Direct Loans (who I went through for my consolidation) they were very helpful in explaining. It did take a while for it to get processed. (Like six months) but I did get the lower rates.
posted by gilsonal at 6:38 AM on May 31, 2006

If you have Direct loans you can do an in-school consolidation through the direct loan program - you have to do it by June 30th (if I remember correctly) to lock down the current rate. You will not have to start paying until you graduate and your grace period is up. We just did this a few weeks ago.
posted by a22lamia at 6:54 AM on May 31, 2006

If you have Direct loans you can do an in-school consolidation through the direct loan program - you have to do it by June 30th (if I remember correctly) to lock down the current rate. You will not have to start paying until you graduate and your grace period is up. We just did this a few weeks ago.

that is certainly good news. I THINK the loans are the direct type.

any advice as to how i would get started on this process?
My parents handled the loans for me up until now and i have no idea where to begin the consolodation process.

THANKS!
posted by I_am_jesus at 7:09 AM on May 31, 2006

That said, I believe you can not consolidate while you are still in school
This is incorrect.

A22lamia is correct. You get started by going to: www.nslds.ed.gov.

Then you need to contact your lenders and usually on their website, you can consolidate pretty easily.
posted by gramcracker at 7:33 AM on May 31, 2006

You can consolidate while still in school. You should do so, to lock in your rate.

If all your loans are with the same lender, and the lender offers consolidation, you must consolidate with that lender. However, if your loans are with different lenders, then you can consolidate with any lender.

Consolidating does not NECESSARILY mean you forgo your grace period, either. Check with your consolidator.

Finaid.org is a great reference.
posted by fugitivefromchaingang at 9:18 AM on May 31, 2006

Watch out for NextStudent! I have had nothing but problems with them - I'm shocked someone had a positive experience. I submitted my consolidation application June 1 2005 and STILL do not have all of my loans consolidated. If I had any money I'd take them to court. They "lost" a few of my loans and never sent them to the funding company for payoff. They are only a middleman - I would do some serious research before I went with them. They have been completely incompetent and have not helped me at all. They kept telling me that everything was fine and just wait a few more weeks.

I can't recommend anyone better but I urge you to not use NextStudent.
posted by donknotts at 10:15 AM on May 31, 2006

If you live in Ohio or go to school in Ohio then Student Lending Works has the best rates you'll get for consolodation.

They're a non-profit and get money from the state at a great rate to loan back out.

(Disclaimer: I know someone who works there)
posted by Mick at 11:02 AM on May 31, 2006

Watch out for NextStudent!

No kidding? I had a fine experience with them, particularly with all the questions I had up front, and I did it at almost exactly the same time you did. Maybe I just got lucky? Did you end up getting your loan consolidated at the 2005 rate?
posted by footnote at 4:53 PM on May 31, 2006

Great idea on http://www.americorps.org/ , I'll have to look into that (I did apply for Peace Corps a few years ago but without the prior degree it appeared they were looking for, I never heard back from them), hopefully this will be different.

IRT Direct Loans, is this the right site: http://www.ed.gov/offices/OSFAP/DirectLoan/student.html ?

There is a link on the left sidebar that goes to http://loanconsolidation.ed.gov/ .

Finally, with today being June 2nd, it seems like I may be too late for any June 30th cutoff but I will check back here for responses. TIA.
posted by BillyG at 7:23 AM on June 2, 2006