Not Happy with Your Current Consolidation Company?
July 16, 2008
I have heard recently that if you have previously consolidated your Federal loans, you can switch your loans over the US Dept of Education (Direct Loans). Keep in mind that your rate will not change, and your loan term will most likely start over…so if you have been paying for 5 years already, you may be paying for longer. However, this can be avoided by just paying more than what is due each month, therefore you would be done paying sooner than the time allotted in the consolidation. For more information on this you can call 1800-557-7392 or visit loanconsolidation.ed.gov
New Interest Rates for Variable Rate Federal Loans
May 28, 2008
Effective July 1, 2008…
Variable rate Stafford loan disbursed prior to July 1, 2006, that is IN GRACE (IG) = 3.6%
Variable rate Stafford loan disbursed prior to July 1, 2006, that is IN REPAYMENT (RP) = 4.21%
Variable rate Parent plus loan disbursed prior to July 1, 2006 = 5.01%
* note that any Stafford and PLUS loan that were taken out before July 1, 2006, and has never been consolidated, will have these new rates
* note that with consolidation, these rates are rounded to the nearest 1/8% which would make them:
3.625% Stafford in grace
4.25% Stafford in repayment
5.125% Parent Plus
Consolidating Now v. Waiting
April 1, 2008
If you are looking to consolidate your Federal loans now..you may want to wait a few months….but only if you have loans from before July 1, 2006. Here’s why…
Stafford loans taken out before July 1, 2006 are variable rate loans (assuming they have never been consolidated)…and these variable rate loans are reset every July 1. This July 1st the rate may be decreasing, in which case you would want to wait to consolidate until this rate change occurs. The rate should be announced sometime in June…so you will know before it happens.
If you just graduated and all of your Stafford loans were borrowed after July 1, 2006, you can consolidate whenever you would like, as your rate will always be 6.8%. This is because the rate changed from a variable rate to a fixed rate on July 1, 2006. All of your loans are already fixed in at 6.8%…consolidating them will not change the rate, but it can lower your monthly payments.
Consolidating Now v. Waiting
April 1, 2008
If you are looking to consolidate your Federal loans now..you may want to wait a few months….but only if you have loans from before July 1, 2006. Here’s why…
Stafford loans taken out before July 1, 2006 are variable rate loans (assuming they have never been consolidated)…and these variable rate loans are reset every July 1. This July 1st the rate may be decreasing, in which case you would want to wait to consolidate until this rate change occurs. The rate should be announced sometime in June…so you will know before it happens.
If you just graduated and all of your Stafford loans were borrowed after July 1, 2006, you can consolidate whenever you would like, as your rate will always be 6.8%. This is because the rate changed from a variable rate to a fixed rate on July 1, 2006. All of your loans are already fixed in at 6.8%…consolidating them will not change the rate, but it can lower your monthly payments.
Parent Plus loans & Consolidation
March 19, 2008
Parent Plus loans are Federal based loans taken out by a Parent on behalf of a child. Here are some quick facts about the loan before I touch on the consolidation of these loans:
1. these loans are taken out under the parents ssn, and can NEVER be transferred to the students name when they graduate
2. the student has no responsibility whatsoever in repaying this loan
3. the payments on these loans start right away…they are not deferred because the child is in school (this is not the case with Stafford loans).
4. A parent plus loan is not a joint loan between 2 parents…even if you are married, only one parent applies for the loan and the loan will be under that parents ssn.
Ok, so consolidation…a typical college student is in school for four years. Lets assume a parent will be borrowing 4 plus loans in total; one for each school year. The loan is typically applied for in the summer time…and half of it is disbursed for Fall semester, and the 2nd half will be disbursed at the start of spring semester. The loan payments will not begin until the loan is fully disbursed…(so spring semester is when the parent will receive their 1st bill). The following year, the parent repeats this process, and spring of their child’s Sophomore year they want to consolidate the 2 loans together. I say spring because you cannot consolidate a loan that is not fully disbursed. So to apply for a loan consolidation for your 2 loans..you simply fill out a Consolidation Promissory note with the company of your choice. Your loan payments will then be paid back to the company you chose…instead of your initial lenders for the loans.
Let’s add another child to the mix…many times parents have multiple children in college at the same time. Let’s say Dad and Mom have two children, Ben and Molly. Ben is a freshman at College X and Molly is a Junior at college Z. Dad has borrowed a plus loan for Molly for each year she has been in school. He wants to do the same for Ben. Dad CAN consolidate his PLUS loans together even though they are for 2 different children. However, if mom applied one year, with her ssn…her PLUS loans may not be combined with Dad’s PLUS loans. So keep that in mind when borrowing…it should be the same parent every year…unless you have no plans in consolidating…then it will not matter.
One last fact about the PLUS loan is that its forgiven if: the parent that borrowed it becomes deceased OR the child that it was taken out for becomes deceased. Post any questions you may have about this loan….
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