Recently I have been receiving notifications from my student loan lender SallieMae that I am eligable to lock in a 2.875% rate once my student loans come out of the grace period (June). I have been receiving a rate of 2.82% while in grace but I was informed by my loan rep that my rate will increase to 3.42% after I am out of grace. I'll be blunt, I don't know too much about finances. This is the only loan I have taken out in my entire life, besides a credit card. I am new to the idea of getting another loan to pay off an existing loan. I understand people do this with there home mortgage loans all the time to secure the lowest rate. What are some of the details I should be looking for in this contract to reconsolidate, and is reconsolidation of a student loan a good idea at all?
Advice about student loan consolidation
- Thread starter MF-DIF
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Student loans are typically the cheapest debt you will ever have. It's always a good idea to reduce your interest rate if there is no cost involved that would offset your savings (hence people refi their mortgages when it makes sense.)
I would encourage you to make sure there are no fees, since this isn't a drastic change in the interest rate. Also, make sure you pay off all your higher interest credit cards and debts before your student loans. This is cheap money and is actually classified as "good" debt, if there can be such a thing.
Don't stress about carrying your student loan for a while, since you are paying a nominal rate and have a long time to repay. Focus on paying off higher cost debt first.
Good luck!
I would encourage you to make sure there are no fees, since this isn't a drastic change in the interest rate. Also, make sure you pay off all your higher interest credit cards and debts before your student loans. This is cheap money and is actually classified as "good" debt, if there can be such a thing.
Don't stress about carrying your student loan for a while, since you are paying a nominal rate and have a long time to repay. Focus on paying off higher cost debt first.
Good luck!
Do you get to claim interest on student loans as tax deductions?
At least here in Canada 100% of the interest is tax deductible, but if you do something like consolidation your tax benefit disappears. May not apply in the US though..
At least here in Canada 100% of the interest is tax deductible, but if you do something like consolidation your tax benefit disappears. May not apply in the US though..
Student loan interest can be written off if your AGI is below a certain $ amount, which I can not recall at the moment.
satan_srv said:
I don't think that's the case in the US. Of couse I can't say this is true 100% of the time, but I consolidated my student loans about a year ago and I was still able to deduct the interest.
Actually, if it's anything like the setup they keep offering me, in the long run it costs you significantly more. They consolidate the loans, but they also move you to a graduated repayment plan - you pay less now, but your payments increase with time - also, the amount of interest you actually pay increases, since more principle stays around longer.
A couple of things to remember - going to automatic payment withdrawal often drops the rates, also, after XXX months of no missed payments, you get another interest rate drop.
My Unipac/Nelnet loans are now at 1.72 and 0.9 % interest, my SallieMae are at 1.92 % interest. I would personally recommend waiting and paying them off as they go - if you have any other consumer debt*, it's better to pay that off first.
If you've got any specific questions or details about the offer, I'd be glad to read through them - just email me.
A couple of things to remember - going to automatic payment withdrawal often drops the rates, also, after XXX months of no missed payments, you get another interest rate drop.
My Unipac/Nelnet loans are now at 1.72 and 0.9 % interest, my SallieMae are at 1.92 % interest. I would personally recommend waiting and paying them off as they go - if you have any other consumer debt*, it's better to pay that off first.
If you've got any specific questions or details about the offer, I'd be glad to read through them - just email me.
If you plan to return to school, then don't consolidate.
I believe you lose the ability to defer your loans if you go back to school for another degree, which is something to consider.
And you can only consolidate your loans once. So if your loans are small, it's probably not worthwhile to consolidate, since you can choose to pay off the highest interest loan at will if you make enough money, and leave the lower interest loans for payment later.
I believe you lose the ability to defer your loans if you go back to school for another degree, which is something to consider.
And you can only consolidate your loans once. So if your loans are small, it's probably not worthwhile to consolidate, since you can choose to pay off the highest interest loan at will if you make enough money, and leave the lower interest loans for payment later.
i'd consolidate now, while the interest rates are so low. you can only consolidate once. and it won't cost you more in the long run, since you can change your payment plan at will...interest only for hardship, graduated payment if that's your schtick, or regular payments over 10-30 years... crap i wish my student loans were that low! mine are at 6.1% which overall isn't bad, but of course i have buyers remorse since the interest rate kept falling after i thought it bottomed out... but can't get much better than what you've got!
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