Help me internet strangers!

June 26, 2006 8:06 PM

Can I consolidate my non-federal student loans?

I keep getting these great offers to consolidate my recently acquired graduate school loans before July 1st, but unfortunately the offers are all for federal loans and mine are private (through Sallie Mae). Is there a way to consolidate these loans before interest rates go up? And if so should I do it?

posted by fshgrl to work & money (8 comments total)

I don't think you can do private loans.
posted by MrZero at 8:36 PM on June 26, 2006

I tried - and you can't do private loans.
posted by k8t at 8:42 PM on June 26, 2006

You will probably not save much (or any) money by consolidating your private loans.

Federal consolidation loans have a fixed interest rate which is set by the government. They allow borrowers to "lock in" their current rate, which of course is good if rates are expected to increase.

This regulation doesn't apply to private loans. Private consolidation loans will be offered at market rates, meaning that lenders will offer you a higher rate if they expect rates to rise, or a lower rate if they expect rates to fall. (Otherwise the lender would be better off investing their money some other time or place.)

That said, if you can replace your current loan(s) with a consolidation loan that has a lower fixed rate or fees, it's certainly worth considering. Note that most consolidation loans offer a longer repayment time, which means lower monthly payments but a higher total cost in the end. Avoid those if you can.

FinAid.org has a little more information.
posted by mbrubeck at 8:42 PM on June 26, 2006

Although slightly off-topic, if there is any way to get yourself away from Sallie Mae, DO IT. They are the most horrible company with which I have ever dealt. They engage in egregious business practices. Although, generally, I don't believe you can consolidate private loans with a federal consolidation, some lenders out there might do it. I would call around. Perhaps even try to find a private consolidation company.
posted by orangeshoe at 8:43 PM on June 26, 2006

Well that's about what I figured, oh well. Thanks!

orangeshoe, I don't find them to be any worse than any other lending institution- what exactly did they do to you? I have more problems with my credit card company trying ot sneak charges in, to be honest.
posted by fshgrl at 9:38 PM on June 26, 2006

There are private loan consolidators, but all they do is lump your loans together -- the interest rate still fluctuates with the prime, so it's really no different than what you've got going on with Aunt Sallie. Also, I feel your pain!! :-) (Also, I haven't had too many problems with Sallie Mae either)
posted by echo0720 at 7:13 AM on June 27, 2006

First off, if you have ANY Direct or FFEL loans you're still paying off, then I would urge you to consider consolidating with Direct Loans. If you do have those types of loans, I believe you can consolidate all of your student loans into a single fixed-rate loan with them. Compared to private lenders, Direct Loans is just better. They have more flexible payment plans and are less punitive about late payments. Their consolidated rates will be the same or lower as any private lender.

mbrubeck: Although most consolidated loans allow you to pick 15 or more year repayment plans, they never force you to take that long. Most, if not all, allow you to change your plan at any time and you can always overpay in any month (that's definitely true for DirectLoans).

You can see if you're eligible by going to Who is Eligible?. It's really, really worth checking out.
posted by skynxnex at 8:02 AM on June 27, 2006

If your loans are thru Sallie Mae, you should be able to consolidate thru Sallie Mae. I just applied thru them to consolidate my non-federal loans. They're running a thing now about applying online to beat the 7/1 deadline.
posted by misanthropicsarah at 4:58 PM on June 27, 2006