Does anyone consolidate anymore?

[EvilNewbie]

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I remember looking at this a few years ago and a rep. told me that if you consolidate the interest rate "bump" after the grace period is gone... so if your interest rate was 3.2% before the grace period expired, it would bump to 3.7% after the grace period... but now everything is 6.8% fixed, does that mean it will bump to 7.3% after the grace period is over without a consolidation?

I been surfing the web and now I cannot even find ONE lender that will consolidate loans.... do they still do this anymore?

 

[Docsav]

I been surfing the web and now I cannot even find ONE lender that will consolidate loans.... do they still do this anymore?

Great question. I'd like to know this too, or how it will shake out with the new administration. I've been trying to consolidate for months now and can't find any lender that will do it. I need to get these loans consolidated NOW, anyone have some tips?

 

[Buckeye(OH)]

No, you can no longer consolidate.

 

[Docsav]

Man, that's awesome. Back when I didn't need consolidation I was getting 10 pieces of junk mail per month.

Now I have a 1600 dollar a month payment with no job. Sucks to be me.

 

[southerndoc]

You can't consolidate anymore? Are you serious?

When I consolidated you had to do it within your grace period in order to keep the lower interest rate.

I really lucked up by consolidating with Sallie Mae at 2.875%. As soon as I signed up for automatic debit, it knocked it down 0.25%. 3 years of on-time payments and I get a 1% cashback bonus, and after 4 years of on-time payments I get an additional 1% off. A loan with only 1.625% interest is unbelievable to me. I'm certainly in no rush to pay it off. I make money by putting any extra cash elsewhere. Even ING pays more than my interest is charging.

 

[Docsav]

Yeah, I've applied to a few different lenders, including Sallie Mae, all with the same response, "Sorry we are currently not accepting consolidation applications." I guess it's the market crisis, and hopefully it will reverse soon.

It is the worst thing that could have happened at this point in time; I'm studying for the boards right now, so -- no job, and I have both Sallie Mae and AES breathing down my neck wanting their money. I've used all my forbearance time, so I know this is pretty much my fault.

It's just tough when you have to use money from a family trust to pay these lenders $1600-1700/mo and they won't accept an economic hardship at all. Oh well, guess I could go rob a bank..😉

 

[AMDFAO]

In short, consolidation loans do not pay lenders the vast profits they were making years ago. In fact, many lenders would lose money so they are no longer interested nor do they have the capital. If a lender has a choice of making a new Stafford/PLUS loan or taking the same money to fund a consolidation, they are certainly choosing the new Stafford?PLUS since they make more money. It is a business for lenders after all.
There aren't that many players around but Direct Lending (the actual gov't) is still willing to consolidate (basically buy) any federal loan from any lender. There homepage is www.loanconsolidation.ed.gov
In order to have Direct buy them from another lender they cannot be in an in-school deferred status (other deferments, forbearance are eligible).
Alternative consolidation is an even harder one to find since the loans have no guarantee of repayment from the Gov't and are far riskier to the lender.
Will the market recover? I hope so but if the Feds continue to pay less on a consolidation loan, I don't see lenders tripping over themselves as they did years ago since they were basically making 6% on top of what the borrower was paying. That's why there were incentives (basically profit sharing or loss leading).

 

[Docsav]

Thanks for that quick reply, AMDFAO. Economics is not my forte.

Anyway, I guess my best bet right now is to go with the Direct Loans program? I have a mix of federal and private loans with Sallie Mae, AES, and another company (which are in forbearance for another year). I was trying to consolidate the SM and AES loans together and keep the other loan in forbearance so I could re-consolidate later and maybe get a better rate, but I'm drowning in debt right now. I guess the gov't is my only option. Well, thanks for the tip.

Evilnewbie, sorry if I hijacked your thread about a rate bump..

 

[rgerwin]

Fixed is fixed. Doesn't change, period. Before repayment, during, whatever. Since about 2006. We consolidated my husband's loans b/c he had one straggler from the old days that would have gone up had we not. Otherwise, not really alot of help. This is abig problem for us big ticket graduate students.