May 31, 2007

Rate changes and consolidation

Posted in Consolidation at 1:34 PM by Joe From Boston

So we have the info on the new rate changes – what does that mean to people who want to consolidate?

Well, it means we probably won’t have the crush of consolidations leading up to last July 1 because the rate increases are quite small.  Which, I admit, is good for my sanity.  🙂

But what does it mean for the you all?  We’re at a rather unique occurrence in terms of student loans, historically speaking.  The rate increase is so minuscule that, depending on your situation, consolidating may or may not be in your best interest

Lets start with “time to repay”.  What do I mean by that?  Federal student loans have a repay term of 10 years.  So each of those Stafford Loans you have or your child has must be repaid within 10 years of when you start repayment, barring any forbearances or deferments.   If you can’t afford to repay them all now, you can consolidate and it will roll all those loans into one consolidation loan that can have up to a 30 year loan repayment term.

+ You have longer to pay it back – if you’re broke this could be a godsend
– You have longer to pay it back, so you’ll end up paying more money in the log run

+If you’ve used up all your forbearances and deferments on your federal loans, they renew when you consolidate and you can go into forbearance or deferment again if you qualify

-/+You’ll be dealing with a new company – that could be scary or could be wonderful!

More to come later…

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