Consolidation: What Happened to Those Low Interest Rates?

[BobA]

I'm an MS4 about to start residency, and I'm thinking about consolidating my 10 or so student loans. Since I have >250K in debt, I'd obviously like to get the lowest rate possible.

When I started this whole medical school journey in 2004, I was thinking I'd someday be able to consolidate my loans into a low-interest rate loan. Something with a 2-4% interest rate. Pre-2006 I consolidated some loans and got an interest rate of about 3.5%. I vaguely remember being told that the student loan consolidation system changed in 2006 and that those low rates aren't possible anymore. Is that true?

Is there anyway I can consolidate my remaining loans which have a weighted average interest rate of 6.25% into a lower interest consolidation loan? My My Grad PLUS loans have a gaudy 8.5% interest rate. That's crazy! What happened to all those low-interest rate student loans? I can't find them!

Was it something that happened in 2006 that made them go away forever? Have they just dried up as a result of the credit crunch? Should I wait and consolidate at a later time?

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[yadayadadude]

Was it something that happened in 2006 that made them go away forever?

Yes. Congress passed a law that fixed interest rates on student loans. Low consolidation interest rates are gone forever.

 

[CME2P]

I'd love to hear some ideas on consolidation as well any older people got any advice

 

[EyeWitness]

I'd love to hear some ideas on consolidation as well any older people got any advice

What are the lowest rates you can consolidate at today?

 

[rgerwin]

It's a weighted average of your current interest rates. It amazes me that people have missed this occuring. It's not new news.

 

[BobA]

It's a weighted average of your current interest rates. It amazes me that people have missed this occuring. It's not new news.

I remember just remember something bad happening, but not sure exactly what it was.

Why would congress pass a law like that?

It's nuts that I can get a 30year fixed mortgage with an interest rate of 4.75% but the weighted average of my loans is 6.25%.

Why the heck did congress make a law like that?

I'm sure there are plenty of banks out there that would love to have me kicking them 4% every year for the rest of my life. Why make a law preventing this?