Business Plans

golfingjake says:

That's the 64 million dollar question. A consolidated loan pays off your existing student loans with variable interest rates and makes a new jumbo loan with a fixed rate.

Of course, the monthly payment for a consolidated loan will be lower, but you can also lower your current loan payments to cover interest for the first two or four years and still pay them off in 10 years instead of 30 with a consolidated.

Honestly, unless you are consolidating because you have multiple locations where you loans are serviced, I would hold off on consolidating until absolutely necessary.

The reason are deferments and forbearance. You only have 36 months of financial deferments available per loan. You only have 60 months of forbearance available on each loan. These delay payment if you ever needed some breathing room with payments.
So if you are unable to make payments because you can't find a job or the pay is too low, you can defer payments (and have the government pay the accruing interest on the subsidized loans) until you are able.
Consolidating the loans, you would limit yourself to only 36 months of financial hardship deferment over the 30 year repayment terms, and most consolidated are structured for the government NOT to pay interest while the payments are deferred.

To make my point, unless you are consolidating for the mere convenience of having all your loans in one location for payment, hold off on it until you need it.

The interest rates for student loans are determined July 1 of ever year. If you keep an eye on the rates, you can put your application in to secure the rate for consolidation.

collie_brawny says:

In general, you can't simply "get rid of" your student loans. Repaying your student loans will continue to be your responsibility and there are no easy answers for anyone looking to shake off this burden.

It isn't exactly possible to "negotiate" a lower payoff, but it is possible to arrange an alternative payment plan — some of these plans require very minimal payments for your first few years of repayment. Among the plans to ask your lender about: interest-only repayment; graduated repayment; income sensitive/contingent repayment, extended repayment, etc.

Federal Loan Consolidation is often the fastest way to lower your monthly payment and, sometimes, even your overall costs. It's a good option for borrowers looking to extend their repayment term which, in turn, lowers the monthly payments, often significantly.

OK, about bankruptcy…

For the most part, you heard correctly: Federal Stafford Loans cannot be forgiven, even if the borrower files for bankruptcy. Perkins Loans can sometimes be forgiven/cancelled/discharged when the borrower has filed for bankruptcy. However, I DO NOT recommend filing for bankruptcy on the off-chance that your Perkins might be discharged. It generally does more harm than good.

One other option you might have is Loan Forgiveness. If you work for 5 years as a teacher in a low-income or subject-shortage area, all of your Perkins Loans and *some* of your Stafford Loans can be forgiven. Teaching is pretty much the only way to have your Stafford loans forgiven, but if you have Perkins Loans, there may be others: law enforcement/corrections officers, those in the HeadStart program, early intervention service providers, PeaceCorps and ACTION volunteers, nurses, military personnel, etc. can all have their Perkins Loans forgiven in part or in full. For more information, see here: http://www.finaid.org/loans/forgiveness.phtml

Ryan says:

The two main things that you will come across when thinking about what Student Loan Company to go with are Borrower Benefits and quality of Customer Service. Student Loan Consolidation companies do NOT have the ability to undercut one another and lower a borrower's interest rate due to the fact that this a FREE federal program, regulated by the federal government. The Interest Rate you will receive is regulated by the Federal Government and based on the T-bill.

One thing that separates companies from one another are Borrower Benefits, different companies offer different Borrower Benefits. There are two main Borrower Benefits that you will encounter; .25% reduction for using Automatic Debit, and 1% reduction after 36 ontime payments. I would suggest inquiring with the company as to what their Borrower Benefits are when it comes to Student Loan Consolidation.

The interest rate you receive is based on a weighted average of your individual loan interest rates with the larger loan amount interest rate getting more weight than the lower loan amount interest rate.

Keep in mind it would be in your best interest you go with a company who offers the FFELP Consolidation Loan Program. If you were to consolidate your Federal Student Loan debt with you other debt than you would lose all of your Federal Benefits that come along with your Federal Student Loans. For more information on Borrower Benefits and the FFELP Consolidation Loan Program, please visit the source below.

Gerry S says:

Remember though…a lower payment means more time in debt (unless you reduce the interest rate SUBSTANTIALLY). Also, in debt consolidation, you usually have to throw in the low interest loans along with the others, this cancels out any benefits of lowering the high interest rate loans. My suggestion is to line them up, and one by one tackle them with intensity and ferocity. 110,000 is going to take a little while, so keep your head down, focus and don't get discouraged…Good luck!

irishman1 says:

Wells Fargo might be the only one worthwhile these days. Look for ones that have little or no origination fees and have reductions if the money you owe is periodically auto-deposited.