Find me an education loan consolidator

October 11, 2007 7:33 PM

Recommend me a good educational loan consolidator.

My SO has about 40K in assorted federal loans and we would like to simplify the process by making only one payment and lock in one interest rate. Is there one lender that you guys would recommend over another? Are there any we should run screaming from? What we would like to do is reduce the amount of interest paid (it's tax deductible, yes, but it's still interest) and get a company that knows what they're doing (i.e., not Wells Fargo). I know about Graduate/Collegiate Leverage and will be giving them a call, but I was wondering if there was more info than what is in the archives. Total Higher Education's insta-rebate without x number of on-time payments intrigues me, but I can't help but feel there's some sort of catch, even when the math is in front of me. Thoughts? Recommendations? Handy spreadsheets? I would love to hear it all.

posted by calistasm to Work & Money (8 answers total)

Personally, I'd run screaming from loan consolidation period. Your SO won't save much, and it will damage his credit considerably more than if he'd just work out each of his debts on his own. He could talk to the lenders about payments and interest rates. Sometimes they're willing to work with you if it means getting their money. Whatever you guys do, I suggest making loan consolidation the very last resort. Have either of you spoken to a financial planner?
posted by katillathehun at 7:54 PM on October 11, 2007

Katilla the Hun: I don't think that student loan consolidation is the same at all. You are expected to consolidate student loans and it does have the advantage of locking in interest rates.

To keep in mind: If you are at affected by any possible student loan forgiveness programs then DO NOT consolidate with anyone other than Direct Loans. I consolidated my loans with the state of Illinois because I didn't think it would make a difference and I just opted myself out of a student loan forgiveness for teachers package.

Do not consolidate Perkins Loans either: for the same reasons. Keep them with whatever company owns them as "Perkins" loans.
posted by aetg at 8:24 PM on October 11, 2007

I'd recommend the U.S. Department of Education Direct Loans program. My loans have been with them for several years, and I haven't had much trouble at all, plus they really don't have much incentive to pull some of the underhanded stuff you hear about from other lenders.
posted by dilettante at 8:28 PM on October 11, 2007

I would run screaming from Sallie Mae, if I had to do it again.

They're vicious about sending plugs for consolidation (including pseudo-official letters that say fun things like "final notice!" that could be misinterpreted by the less financially savvy), they push like no other for online banking, and their support staff can often be.. ah, foreigners for whom English is definitely a second language (and communication barriers are NOT what you want to have when it comes down to important financial issues).

That said, consolidation itself wasn't too bad. But the letters...ohhh, the letters! They just don't shut up. Even after you've consolidated....ugh. No, I definitely don't recommend Sallie Mae.
posted by librarylis at 1:04 AM on October 12, 2007

Seconding Direct Loans through the Department of Education. We have a very nice interest rate (less than 4%), pay through direct debit because we get a .25% discount, did all the paperwork online and have never had any issues in the million years it's taken to pay these things off.
posted by Sweetie Darling at 2:25 AM on October 12, 2007

Definitely direct loans through the Dept. of Ed. Best terms, best long-term interest rates. Hie thee here.
posted by Emperor SnooKloze at 6:00 AM on October 12, 2007

I comparison shopped the hell out of mine when it came time to consolidate. Here's how I narrowed down the list:

1) cross off everyone that refused to commit to keeping the loan in-house (many sell it off immediately, leaving you stuck with servicers that are hard to reach, far less "service-oriented", inflexible, etc. BAD NEWS.

2) rank the others by interest discount incentives (don't even bother to look at any offer that doesn't at least include a discount for electronic payment plus discount for N number of consecutive on-time payments).

3) call up contenders #2-5 and tell them the offer they need to beat to win your business. Play the competing offers off one another.

I've now got mid-five figures debt locked in at less than 3%. Sweet.
posted by nakedcodemonkey at 3:52 PM on October 12, 2007 [1 favorite]

I second the US DoE direct loans. If they start making massive profits it would be suspicious. Any other company and it may take decades to realize they are ripping people off :D
posted by occidental at 10:12 PM on October 12, 2007