loan consolidation

[peterpossum]

Is anyone able to share experience or give advice regarding loan consolidation? Now looks like a good time to do it because the rates are pretty low.

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[Goofy]

Originally posted by peterpossum:
•Is anyone able to share experience or give advice regarding loan consolidation? Now looks like a good time to do it because the rates are pretty low.•••

This is a very useful thread, and I hope others who have done this can share their advice.

If you are still in school with stafford loans, you are currently getting the lowest rate, so there is no need to consolidate. More importantly there is no need to lock in what happens to be a historically low rate. You are already getting it.

Rates change every June, so you if you want to lock in what amounts to an all time low rate, do so late in May. One caveat, you will need to start repaying your loans unless you work out your own deferrments. Many people assume you cant continue to defer once you consolidate and lock in the low rate. This is not true. It just takes a little more legwork.

 

[gt5045b]

Klebsiella is right. I would say that now is NOT a good time to consolidate that loan if its a Stafford. The interest rates are recalculated every June 1st based on the latest 91 day Treasury bill rate. In 2001 that was 3.69% leading to an in-school/grace rate of 5.39% and a repayment rate of 5.99%. The current 91 day Treasury bill rate as reported on 1/24/2002 was 1.67 percent. So, hypothetically, if the interest rates were to be calculated today they would be in-school/grace = 3.37 and repayment = 3.97. That's right, I said you could potentially reduce your interest rate over 2% by waiting another few months. I'd wait till closer to June and see what happens. I don't think Greenspan is going to increase the fed interest rates that much in the next four months.