Re: Nelnet, student loan consolidation - anyone have any experience with this

I have no info on one lender over the other, but yes, by consolidating 
you do lock in the current consolidation rate instead of staying on a 
variable rate that could go as high as 8.5% if (when)interest rates go 
back up in the future.

However, the rate normally doesn't go down when you consolidate, but 
instead gets rounded up to the next 1/8th of a point. But when interest 
rates go up on the variable rate, you stay at the fixed rate.

If you graduated last May, you should still be in the grace period which 
makes your Stafford variable rate 2.82%, but 6 months after you 
graduated the rate will become 3.42%. Next July 1 it will change again 
to reflect the rates for that new year, and it will change every July 1 
after that.

If you consolidate the rate should be a fixed 3.5%.

If your current rate or the offered consolidation rate varies from the 
above, it may be that the lender is giving you a special promotional 
rate or it's due to when you took out each of the loans.

In any case, since rates are the lowest they have ever been (which means 
they will go up in the future) consolidation is a good move.

But be careful about the payment length - many consolidators will 
automatically put you on a 30 year plan which means smaller payments but 
a lot more interest over those years. If you can afford to do so, try 
for a shorter plan where you continue to pay about as much per month as 
you are now. If they don't offer such, you can still make the larger 
payment which will shorten the life and the cost of the loan - there is 
no penalty for early repayment.

As always, read all the terms before you sign.

--
Steven B. Blank
College Financial Aid Consultants
29 Ives Hill Court
Cheshire, CT 06410
(203)250-7761



Ami wrote:
> Hello everyone, 
>
> I have recently graduated on the 6 year super-saver plan from The
> College of Charleston.  This plan allows you to take as much time as
> you need, provided that you leave with almost 15,000 dollars in
> student loans.
>
> Since then, I have been faithfully repaying my loan, but i keep
> getting these student debt consolidation emails and letters in the
> mail.  They promise a locked interest rate of 2.25% (I am now paying
> 3.42%).  These advertisements also threaten that since my loan is
> "variable," the interest rate could go up at any time, to a limit of
> 8.5%.  It makes sense to consolidate with a fixed interest rate, but I
> wonder if these companies are trying to take me for a ride, or if
> there is any truth to what they are saying.
>
> If the interest rates go up again, will my present student loan rate
> go up also?  If anyone does believe that it would be smarter to
> consolidate, do you have any experience with a certain company?  There
> are so many, it confuses me.  I would rather not get involved with the
> wrong company.
>
> Anything will help, 
>
> Thanks, 
> Ami