Student Loans are so great when you get them. They enable you to go to school and focus on your studies. You study hard and see a panorama of possibilities, a bright future indeed. After graduation you are so relieved that all the stressful demands of school are over- the late nights up studying, the tedious assignments, and the pressure of deadlines. At some point it hits you, often like a ton of bricks, maybe the hard part isn’t over, maybe it is still to come. School is just the beginning; it just preceded the real world. You have now made it to the real world, and now you have to pay back all the money you spent on school to get here.
When you are filling out applications, finding co-signers, and all of that, it seems like getting student loans is difficult. Once it comes time to pay them back, you realize that this is the difficult part. While you are going through school, all you are concerned with is getting through, getting it done, graduating, and finishing well. You don’t put too much thought into what it is going to look like when you have to pay back that debt. Some wise students pay the interest portion of their student loan while going to school. The interesting thing about the interest payment is that if you continued to pay only that, your loan would NEVER go away, and if you don’t pay at least the interest portion your debt actually GROWS.
Thinking about your student loans can leave you with a sick feeling. Getting them organized so that you have a better idea of exactly what you are dealing with helps a lot. That is what consolidation is all about. You put all of your debts into one debt. You have one payment, one interest rate, one bill, and you can easily see where you are at with your loan. Seemingly small things, like interest rates, can make a big difference when you are dealing with tens of thousands of dollars. Shopping around for the best rates and best options to meet your needs is worth a little bit of time and effort. You could be living with these loans for decades, so act accordingly. The companies below are interested in helping you out, if you are looking to consolidate your student loans.
CU Student Loans: Over 140 not-for-profit Credit Unions came together from across the nation to help students afford higher education. “CU Student Loans” was the result. This program offers private loans to students and private loan consolidation to graduates.
In order to make use of the services, you need to be a Credit Union member. As a member, dividends are paid to you, instead of to shareholders the way they are at banks. Credit Unions keep their fees low, on both accounts and interest rates. This can save you money and is worth checking into as you compare the best places for loan consolidation.
Wells Fargo: Wells Fargo is a bank which offers private student loan consolidation, only a handful of banks do. Combine all of your private loans together to simplify managing them with one single monthly payment. There are variable and fixed rate options available, each has its benefit and you can choose which is right for you. Variable rates are less predictable, but are low right now, so you might want this option for a shorter term. Fixed rates protect you long term in case rates jumps up, but the rate is initially higher to reduce the risk to the lender.
Incentive discounts can be a perk when dealing with a bank. If you already have accounts with them, they will offer you a reduced interest rate. You can get further discounts for having an excellent credit rating, automatic withdrawal and having a co-signer back your loan. Wells Fargo offers a “Graduate Loan” intended for MBA, law, or other graduate degree students. When you graduate they then offer you an added .25% discount off of the interest on your loan.
Without any discounts, the current annual percentage rates (APR) are:
6.12%- 9.44% Fixed interest rate
2.97%- 8.03% Variable interest rate
You can see that there is quite a range in those rates. It is highly beneficial that you make use of every possible discount available to you. Even a ¼ of a percent makes a difference when you are dealing with tens of thousands of dollars. If you do not have a good credit rating, sometimes it is a good idea to wait one year before making the move to consolidate. Waiting one year, while working to improve your credit, will pay off if you get a better rate for a long term because of it. Terms can go up to 30 years. Think about the big picture.
SimpleTuition: SimpleTuition is not a lender but gives you access to “Partner Lenders” and provides the service of allowing you to compare them and get basic estimates. The estimates are just that- estimates. Until you directly apply to a specific lender, you don’t find out the interest rate which applies to you personally. This is a great way to look at a number of lenders without having your credit looked at though.
The comparison tool is a helpful and easy way to see what lenders are out there. Student loan consolidation is not something everyone qualifies for. Applications can take 45-60 days to process, so you don’t want to put all your eggs in one basket and sit and wait. Applying to more than one lender doesn’t cost anything except a hit on your credit. Every time your credit history is looked into it leaves a mark; that is just something to be aware of, not something to worry about.
Cedar Education Lending: This is another lender offering student loan consolidation. You can possibly combine your loans of amounts from $7,500- $125,000, and even more if you are a graduate student. If you are paying high interest rates on various loans, you would be wise to see if you could combine those loans and get a better interest rate through this lender. They have fairly low interest rates. They do charge an origination fee of 1%. This is a one-time fee and not a recurring charge like interest. An origination charge and low interest rate still trumps no origination fee and a higher interest rate. It is just something you need to be aware of when making your calculations and comparisons.
Cedar Education Lending seems to have happy customers. It has an “interest only” payment option for four years, which is great if you are temporarily struggling with balancing your financial obligations. The co-signer can also be released after only 12 months, if your payments are principal and interest and you make them all on time.
SunTrust: SunTrust is straightforward about their requirements and rates. They do not charge an “Origination Fee,” which is something to watch out for when applying for any loan. The origination fee is often as small as 0.5%, but it can be higher than 4%. Depending on the amount of your loan, this can mean thousands of dollars.
If you meet all of their requirements- you have graduated from an approved school, your debt/income ratio is acceptable, and you are an American citizen or permanent resident, then SunTrust might be the right bank to help you simplify your life by consolidating your loans. You can apply easily online and then compare rates and payments. You have a choice between a variable and fixed interest rate option.
StudentLoanNetwork: You can use StudentLoanNetwork to compare lenders and find the right fit for you. They also have a site specifically for loan consolidation: StudentLoanConsolidator.com. They offer information about both federal and private loan consolidation including calculators and advice about how to avoid default.
This is one of the best sites for information about student loans and everything related to them. If you can’t find answers to your questions on the site, you can visit their forum, ask your questions, and get replies, or just search the forum for already asked questions. To access the forum, visit FinancialAidForum.com There are private loan discussions and consolidation discussions where you can find answers to questions you didn’t even know you had.
Many of the banks are getting out of the student loan business. The Bank of America is out; the U.S. Bank is out. JPMorgan Chase is no longer accepting any applications for student loans. They instead encourage you to seek out federal options, such as federal loans, grants, and scholarships. SallieMae is the top lender for education loans, but they don’t provide loan consolidation. Discover bought the student loan portfolio from Citigroup, but Discover doesn’t offer student loan consolidation either. Wells Fargo acquired Wachovia a few years ago, and now it holds second place as national lender for student loans. Wells Fargo does provide the service of student loan consolidation, so that might put them at the top of some lists.
Banks have been focusing on things other than lending to students because the government has taken over so much of that role. About 90% of student loans come from the federal government. There is also a rising level of default on student loans, so banks are leaving the risk to Washington.
Federal Loan Consolidation: Federal loans can be consolidated, although not together with private loans. If you have multiple federal loans, as well as different servicers, you might want to simplify your finances by having a single payment. Sometimes you can lower your interest rate or get a fixed interest rate, if that is what you are going after.
You must have a significant amount of debt to consolidate and have more than one type of federal loan. One difference between consolidating federal and private loans is that it is much easier to consolidate federal loans that have been defaulted on. If you can make suitable payment arrangements, then you will probably be approved. As long as all the loans belong to the same person, they can be consolidated:
Federal Insured Student Loan (FISL)
Health Professions Student Loans (HPSL)
Loans for Disadvantaged Students (LDS)
Nursing Student Loans (NSL)
Consolidation for the purpose of having a longer term to repay the loan can be a good thing, but you pay much more interest over the long term. Interest paid on a student loan over $600 is a tax benefit, so remember that at tax time, but apart from that, you really want to avoid paying interest on your student loans.
Even though you don’t have to make payments on your student loans while you are in school, many loans still accrue interest. That interest becomes part of your loan upon graduation, it compounds and you are now paying interest on interest. That is painful, and it is also why many people make interest payments on their loan while they are in school even though they don’t have to. Any missed payments will result in the same thing, paying interest on interest. You will never pay off your loan this way. Whatever you have to do to get your loans sorted out so that you are making progress towards paying off the principal- do it. There are many more repayment options when dealing with federal student loans, as opposed to private ones.
Income-Based Repayment (IBR)
Pay As You Earn Repayment
Federal student loans can also be forgiven if you work in a Public Service job. There are a lot of jobs that fall under this category, such as Law Enforcement, Public Education, Military Service, Public Health, etc. You can check out a more detailed list here: www.myfedloan.org
StudentAid.ed.gov: This Federal Student Aid website can answer a lot of your questions regarding federal aid and federal student loans. You will find all the appropriate links to servicers and where to go to apply for federal loan consolidation. You begin this process online at loanconsolidation.ed.gov
NSLDS.ed.gov: This is the website for the National Student Loan Data System. You can go here to retrieve your loan information. You will need this information before applying to consolidate your federal loans. Apply For Federal Loan