anyone consolidate private student loan?

Avatar for aerandel
iVillage Member
Registered: 03-25-2003
anyone consolidate private student loan?
3
Mon, 02-20-2006 - 11:57pm

Has anyone here consolidated private student loans? I have tons of student loans, and I already consolidated my federal student loans before the interest rate jump in June. I still have 3 large private loans though and I have only found a few companies that will consolidate. The one I like the most will not consolidate them until I am in mandatory repayment status on those loans, which will be at least another 6 months, and I hold interest rates currently around 12%! I hate the idea of accruing interest at that rate for the next six months before I can consolidate. So has anyone else consolidate PRIVATE student loans, and who did you go with? Do you like them? What interest rate did you get? Thanks!

                          

             

Avatar for endomagazine
iVillage Member
Registered: 11-09-2004
Tue, 02-21-2006 - 12:28am

Hello,

We knocked our student loans down with extra snowball payments after paying off our car. It made sense to get rid of secured debt before unsecured debt (credit cards). When one of our credit cards offered a 2% for life balance transfer, we paid off the student loan with the transfer offer and continued to snowball it until gone. *If* you have a good deal on a balance transfer (I'd go for the "for the life of balance" offers and no transfer fee) and you have the available credit, you could "consolidate" on your own.

Considering that your interest rate is 12% (ours was 8%) you can probably find a better offer from a credit card balance transfer offer. It's trading one kind of debt for another, but being a little "late" on a credit card payment is better than being a little "late" on a student loan! Our minimum payments were smaller because of the transfer too.

Sincerely,
Lindsey Schocke

Geeks on Tap: Mission Accomplished

iVillage Member
Registered: 05-09-2005
Tue, 02-21-2006 - 1:34am
Doesn't the consolidation rate mirror the in school rate? So if your interest rate while in school is 3.5%, then that would be the consolidation rate? Anyhow, that's how it worked for us. Those private loans seem awfully high! Is that the inschool rate for you now? I would agree with the previous poster that a low rate balance transfer for the life of the transfer would be a lot better if you can find one. Just be sure it is for the life of the transfer. The only problem tho is that there is no deferment period for hardship or unemployment or anything else with the credit card transfer and at least you can get those with the consolidation. You could consolidate and choose the longest rate possible to keep the required payments low, and then try to pay more than what is required. The other thing about student loans is that the interest is deductible even if you don't itemize. So that's something else to think about. Good luck with all of this.
Megan
iVillage Member
Registered: 01-25-2006
Tue, 02-21-2006 - 2:28pm

My only student loan is also a private loan and no cap on its interest rate. I can't believe I signed that but I really didn't have a lot of options and the education more than doubled my salary. Anyway, here's what I know and can share:

1. You can start paying on the loan before it goes into repayment and anything (even a little tiny bit) will help because they are probably going to capitalize that interest when it goes into repayment. This means they will add all of the interest you are accruing while in school to the principal of your loan. I've been paying for several years and just now am starting to pay on the actual principal of the loan I took. It's taken me all that time just to pay off that interest and of course, I paid interest on the interest. I had the best of intentions to whittle away that interest before it went into repayment but unemployment kept it from happening. This is also true of non-subsidized Federal loans for any of you that have those.

2. It is my intent to move portions of my student loan over to low interest balance transfers and possibly home equity loans over the next few years to help me pay it off faster and at lower rates. I am currently getting a portion of my interest deductible so I wouldn't move more than that a year to a non-deductible card. It's likely I soon won't be eligible for that deduction and will more seriously consider a home equity loan for this so I can get the duduction. I will try to do this in increments I can pay off in 1-2 years at a time because there are benefits of deferment and forbearance that would be helpful in a time of unemployment or the unlikely circumstance that I go back to school. I also don't want to move too much of this onto secured debt at a time so as to not jeopardize my home.

3. Student loans are considered 'good debt' by most financial people so don't beat yourself up about them. Do your best at working your way through them and whatever you do, DO NOT default on them.

HTH!

Peg