financial advice needed - Flex Student Loan Consolidation

[avlena]

http://www.flexloan.nelnet.net/

I have a LOT of student loans after 4 years of school, and i keep getting notices and ads wanting me to "consolidate student loans!". has anyone here ever done something like this? is it some sort of scam, or is it really beneficial? i don't really understand financial stuff very much, and tend to avoid it as much as possible, so any help would be greatly appreciated! grazie!

[ufcrusher]

You should shop around to see what provider will give you the best interest rate and lowest payments. What happens is generally, with todays market your loans originated at a higher interest rate (say 8%) when you consolidate you can get a much lower rate (say 3%). Additionally, you only have to make one payment rather than four (or how many loans you have) and you can stretch your payments out over a longer time, thus lowering your payment considerably.

So in most cases you can cut your payment down in half. The problems that you can run into is, whether all your loans can be consolidated. Private Lender loans generally cant be, although some companies have changed that policy..so in most cases its only for your federal stafford loans. Additionally, most lenders only allow you to consolidate your loans one time, so lets say you decide to go to grad school and accrue another $100,000 in loans...you wont be able to consolidate your old loans and your new loans, you would have to consolidate just the new loans.

Hope that helps.

[gear02]

I used to get a lot, but I figure if they're advertising via mass mail, then they suck.

When I consolidated, I used the official program to do so. Safer and you get a good rate. I suggest doing so and doing it now since rates are very, very low.

[Butch]

If you are going to consolidate . . . wait a couple months . . . loan rates are calculated once a year, and they are coming up for review at the end of May . . . they should be lower if you wait until the new rates are in effect . . .

http://www.cnn.com/2003/EDUCATION/05/08/student.loans.ap/index.html

WASHINGTON (AP) -- Some relief is on the way for families struggling to cover soaring college tuition: Lower interest rates are about to make federal loans cheaper than ever.

The changes, which could save borrowers hundreds to thousands of dollars over time, come as American families increasingly rely on debt to finance college education.

The interest rate on Stafford loans is expected to fall from 4.06 to 3.42 percent, the lowest since the program began in 1965. These loans are open to all students, and the government will pay the interest for financially needy students while they're in school.

The rate for another federal borrowing plan -- the Parent Loan for Undergraduate Students -- will likely fall from 4.86 percent to 4.22 percent.

And those who consolidate their loans can lock in a rate as low as 3.5 percent, down from 4.13 percent, according to Sallie Mae, the largest source of student loans.

For example, someone who consolidates $25,000 in recent debt could save almost $2,000 over 20 years, or $8 a month.

These new rates for the coming school year would apply to loans taken out after July 1, 1998. Those who borrowed earlier would also see savings depending on when their loans were issued.

These lower rates, while likely, are not guaranteed. Final interest rates on federal student loans will be determined at the end of May based on short-term treasury bill rates then.

Every dollar helps
"We're all seeing the rising cost of higher education. Here's the silver lining: Financing has become less expensive," said Steve Stocks, a financial aid executive with Sallie Mae.

Every dollar may help. As states face their worst fiscal crisis in decades, many have cut spending on higher education. And every state raised tuition at four-year schools this year; 16 increased costs by more than 10 percent, according to The National Center for Public Policy and Higher Education.

The average yearly tuition and fees at a four-year school is $4,081, and room and board costs another $5,582, the College Board reports.

Lower loan rates are fine, but they could encourage state and school leaders to put even less emphasis on grants and college support, said Patrick Callan, the center's president.

"Everyone is borrowing more, and we really don't talk about that very much," Callan said. "We don't ask questions like, 'At what point are we hurting the ability of young families to buy a house?' We are oblivious to that. Loans are kind of the easy way out."

Nationally, federal loans make up the greatest share of student aid. The loans come directly from the government or from private lenders with a government-backed guarantee.

Student borrowers have until six months after college to begin repaying federal loans. Those who consolidate during the grace period could lock in a rate as low as 2.88 percent.

[gear02]

Yeah...I didn't consolidate my loans last year till after July, because that's when the rates dropped.

I think I got in 4.13%. Does anyone know what the estimates are for the rates for next year? Can I consolidate again to get the lower rate?

Edit: I used Directloans because I had government loans like the Perkins and that other one...

[LegendKiller]

I did this a few years ago for myt undergrad loans. I would go through nelnet, Citibank, or somebody large. My undergrad loans were with DirectLoans and thats who I consolidated with. I am going to try and wrap everything up into Citibank this time (who originated all of my grad loans). If you want, you can consolidate some of my loans into yours ;).


LK

[brainsmile]

Originally posted by gear02
Yeah...I didn't consolidate my loans last year till after July, because that's when the rates dropped.

I think I got in 4.13%. Does anyone know what the estimates are for the rates for next year? Can I consolidate again to get the lower rate?

Edit: I used Directloans because I had government loans like the Perkins and that other one... j

I suggest doing your loans with a company soon to go bankrupt. :P

No you cannot reconsolidate if you did it once unless you do it again in between with some other type of loan. For instance you pay it off with a home loan and then reconsolidate. At least that's what I think

[LegendKiller]

Lets say you had 5 loans, you can consolidate those into 1 with the fixed rate set in place at the time.

Then, as in my case, I get 10 more loans. Now, you can consolidate all 11 loans (oringinal 5->1+10=11) into 1 big loan.


LK

[gear02]

Hmm...I would consolidate my car, mortgage, and student loans, but I'm getting 2.9 for my car, 4 for my student loans, and I think about 4.5 for my mortgage.