The loan arranger

[vvvexation]

I'm being plagued by message after message suggesting that I consolidate my student loans--specifically, that I consolidate them NOW! in order to LOCK IN THIS SPECIAL LOW RATE! This sounds shady to me, but even the government website where I'm trying to conduct my mandatory exit interview is linking me to these folks. Are they less shady than I think? Would it actually be a good idea to do this? Would it really lower my interest rates?

Comments

[danaeris.livejournal.com]

Loan consolidation can be a blessing or curse. It does lock you into an interest rate. Since some interest rates are variable (Direct loans are, perkins loans aren't), payments change, which can be frustrating to budget for. If you have different types of loans, you also have different bills. Consolidating them will lead to fewer bills, and a lower monthly bill.

The interest rates could go higher, which would of course be bad for you, and thus, good to consolidate. They could also go down, in which case consolidation would have been a mistake. Of course, then they could go up or down again! So you see, its hard to tell what the best decision is.

The other thing to keep in mind is that your loans as they are can be deferred and/or forgiven for services such as teaching. If you think you are likely to take advantage of these, this may not be the right decision.

As far as special low rates, the Direct Loan rates go up every year on... I think it's May 30. So you have nearly a year to lock in at THIS rate if you're dealing with a Direct Loan.

I was going to consolidate, since the last time interest rates changed, it was definitely for the worse. But I didn't get my act together in time. *shrugs* Your decision!

[gatopreto.livejournal.com]

Having just gotten a mortgage (which, if memory serves me, translates as 'death payment'), I was distressed to find out how much our bank had sold us down the river to direct marketing. We had not made a single payment and we had a dozen letters to consolidate our debt or lower our payments in our mailbox. Freaky.

I think the generic advice is to look before you leap. If it sounds too good to be true, it probably is.

[bk2w.livejournal.com]

Consolidating has another way of lower your monthly payments: reseting the repayment clock. Stretching the same remaining loan over a longer period also has the not so nice effect of increasing the total interest paid.