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Know of any companies out there consolidating private student loans? My girlfriend has both private and federal loans and I have been researching the possibility to consolidate to lengthen the term as well as lower the interest rate. In the end this would cost more in interest, but would allow a more manageable monthly payment.
Wells Fargo is currently consolidating private student loans, but at a variable rate. The rate is 1% above prime. Doing so is risky in your taking on the possible fluctuation of the interest rate.
Anyone have experience with getting a fixed rate on consolidated Private Loans?
Those can only be used for federal loans, and I believe while the payment will be adjusted to your income, the interest will continue to accrue against the principle.
Since the debt is a mixture of federal and private, the federal can be consolidated to a longer term at a fixed rate, which will lower the monthly payment. The private loan can only be consolidated at a variable rate (currently it is fixed); therefore it is risky to consolidate at a variable rate depending on what the current fixed rate it.
Any opinions or anyone experienced with consolidating a large student loan balance?
Sallie Mae might consolidate them. I have both federal and private (large sums) but ended up keeping my private loans seperate and only consolidated the federal. I could have lowerd the interest on the private, but it would have increased the interest on my federal, which is a majority of my loan.
I have a slightly different case as my private loans were from a previous degree and had already been consolidated (so they said), which apparently did not help my situation.
Either way my private loans are 10%ish while my federal are 2.8ish. Plus my private loans will be paid off in 6 more years while my federal will be more like 15. I understand getting an overall lower payment though
Most if not all companies will not consolidate both types of loans together, and even if they did, it is almost never a good idea to consolidate them together. I used to work at a company that used to offer a consolidation loan that offred a combined consolidation loan, and the only time I can remember it being a good solution was when a customer had one large private loan with a high interest rate, and a small federal loan that was needed in order to consolidate (private consolidation required two loans to be able to consolidate).
Also, private consolidation in general only benefits people that have lots of loans in different places and really need to make one payment a month, people that have unusually high interest rates and found a lower rate, and/or people that have short repayment terms with an unmanageable high monthly payment, and with consolidation were able to lengethen repayment time AND reduce montly payments.
Federal Loan consolidation helps if you have variable rate federal loans, as it locks in the current rates which are low right now. I am not sure if it currently benefits federal loans that have a fixed rate. It might if your loans are in different places and/or if you need a longer repayment time and can get that with consolidation. I believe the only option for federal loan conslidation is through the Federal Direct Loan program.
From what I found, Federal has to be above $30k to consolidate and it just takes the average of the rates and sets it at a fixed rate.
The private loans gets a variable rate based on FICO and debt-to-income, which is the big decision maker as the private loans are at several different rates and the variable rate would be slightly higher. The benefit of losing the low fixed rate and opting for a variable is to lengthen the payment terms from 10 yrs to 25 yrs, which lowers the monthly payment.
Transferring from a low fixed rate to a higher variable rate that can only go up; doesn't seem to make financial sense, but it is the only option to lengthen the terms to 25 yrs and lower the monthly payment burden. **Private consolidating does not offer Fixed rates, only variable**
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From what I found, Federal has to be above $30k to consolidate and it just takes the average of the rates and sets it at a fixed rate.
The private loans gets a variable rate based on FICO and debt-to-income, which is the big decision maker as the private loans are at several different rates and the variable rate would be slightly higher. The benefit of losing the low fixed rate and opting for a variable is to lengthen the payment terms from 10 yrs to 25 yrs, which lowers the monthly payment.
Transferring from a low fixed rate to a higher variable rate that can only go up; doesn't seem to make financial sense, but it is the only option to lengthen the terms to 25 yrs and lower the monthly payment burden. **Private consolidating does not offer Fixed rates, only variable**
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I suggest finding a student loan repayment calculator and trying to see how much lower your payments would be per month with a higher rate and a longer repayment term.
When I used to work for a student loan lender, I would compare repayment schedules, and sometimes a longer schedule did not reduce the payments enough to make it worthwhile, and sometimes it did not reduce them at all (it depends on the rates you use to estimate, if the loan would be a variable rate with no cap I'd estimate high to be safe). finaid.org used to have some good calcualtors and comparison calculators so might be good place to start.
Also, if you are talking about low fixed rate federal loans, then unless the program has changed, you can consolidate with the Direct Loan program even if you have less than $30,000 (you need $30,000 to get an extended repayment schedule without consolidating). I forget how much you can extend repayment, however, it depends on how much you borrowed and the Direct Loan program should be able to tell you the terms.
Debt consolidation is a good choice, as for me, because it provides the opportunity of getting less interest rates. Besides, in some cases you can also get a discount.
Federal Loans you cannot consolidate to lower the rate, as they just take the average of your rates. As it's just one loan at 7% so the rate would not change, it would simply just extend the payment terms. Since there is 16 more years on that loan, extending the terms would only save around $33 a month. For $33/month I don’t see writing a check every month for that $33 to be applied to the principle (Stupid loan guidelines would just apply it to the next payment if you don't physically write another check and specify how the excess payment be applied).
Currently $194/month so consolidating out to 25 years would make the payment $161/month
The Private loan balance is much higher and at several different fixed rates at a payment term of 8 more years. Consolidating these would drop the payment as follows if rates change.
The amounts shown would be the amount saved from what is currently being paid of $700/month for the private loan.
4% $ 378
6% $ 317
9% $ 200
12% $ 73
AnnaZ88, if it gets you a better rate that is great. Unfortunate for this situation the Federal Loan rate cannot be changed and stay a federal loan. Since you cannot combine federal and private loans in consolidating, my only option is to consolidate the private and lose some low fixed rates and get a variable rate that could go up significantly.
Looking at the rates over a 20-year history, they have not toped 15% since the 80's but the risk is still there. The worst nightmare would be consolidating all the loans to a variable rate at 4.5% and saving money, but a few years the rate goes up to 12% and we're stuck getting swamped by the interest.
As it has been said, you can't consolidate private with federal (don't know if this was your question, though).
Not many private lenders are into the consolidation business anymore; even Sallie Mae (at least when I tried last year) does not do it anymore. Chase bank still does private loan consolidations and are excellent. My Sallie Mae private loans with rates around 8% all got consolidated with Chase and my current rate is 4.7% (less than my 6.5% fed loans). Note, Chase is the consolidator but ACS Education will actually be managing the payments. ACS doesn't have the most user friendly site, but I have not had any problems with them so far. You consolidate through Chase and after everything is approved and complete, you will begin making payments to ACS.
You can consolidate fed loans no matter the amount. What most people don't know is that every time you get a fed loan for semester after semester that those are actually all separate loans. For example, 4 years of school with two semesters a year is eight student loans if you took fed loans each semester. The federal loan consolidation is fairly simple and is just a few forms to fill out and it takes about a month or two for it to take effect. My payment dropped quite a bit and I had about $15k in fed loans after I consolidated all of them.
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