Loan Consolidation

[DuneHog]

For all of you that are graduating this year, what are you plans for loan consolidation? I know there was an earlier thread on this topic, but I'm wondering if everyone is planning on waiting now until July to consolidate now that it looks like the interest rates will go down. What have your financial aid offices been telling you about when is the best time to consolidate?

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[Brewster]

I was advised to wait.

The new interest rate will be announced at the end of May, but will not take effect until July 1. Therefore, if it goes up, I will have a little more than a month to consolidate at the old rate (enough time for the paperwork to be processed). If it goes down (which it looks like it will), I can just sit back and figure things out during the grace period.

 

[lucas]

I am not so sure the actual interest rate will be so much announced on May 1st but rather a speculation will be announced. No one knows what the new interest rate will be until July 1st. Anyways, I plan on consolidating (cant get much lower anyways!) although I am still shopping for the best deal. I then plan to defer both my Staffords and private loans for three years, then go into forbearence for two years. I will still have to pay off all the interest constantly accruing while in residency, but what can you do! Good luck!

 

[Brewster]

At the end of May (week after Memorial Day), the T-bill auction occurs. It is this interest rate that the Stafford Loan rate is based on. Thus, at the end of May we will know what next year's Stafford Loan rate will be. It will then take effect July 1.

 

[Pureride]

12:30

 

[Jim Picotte]

The auctions occur on every working day and the rate on May 8 was 1.07 which is fairly low. They use the value from one of the last days in May to calculate the interest rate for July 1 (that's why you'll see announcements about the new interest rate well before July 1). Last year they used the rate from May 28 and I don't have to specifics on why they used that day but do know that it is from one of the last days in the month of May. Looks like they'll be going down though.

 

[DrQuinn]

When the interest rate is decided (end of May), it will be in every city's newspaper (likely business section) and undoubtedly will be on this website. If it goes up or down, you'll still have one month to decide. No reason to jump the gun.

Q

 

[Maxx]

I have heard rumors from my fin. aid office that the fixed interest rate consolidation option may be discontinued because interest rates are so low. This would mean that future consolidations would be at a variable interest rate, which would provide little advantage to consolidation. According to them this could happen as soon as the end of June, so they are recommending consolidating now. I'm not sure if they know what they are talking about though, as I can't find any information about this elsewhere. Has anyone else heard about this?

 

[Jim Picotte]

In order for that to happen, the U.S. Congress would have to pass some legislation changing the current laws. It's not impossible but with such a focus on the economy, higher tuitions I bet that they leave it alone.

 

[pas]

Not only congress, but Bush himgloriousself would have to wield his mighty pen. He was about to do it before the war, but didn't want to get unpopular for increasing the cost of education so he left it for later. I don't think it will happen during our grace periods, but watch the news. If he does sign it off then you will still have time before it takes effect. Laws rarely take effect immediately. As long as you consolidate before the potential law takes effect, you will have a fixed rate. I wouldn't consolidate before July 1 because of worries of a change to a variable rate, but would advise keeping an eye on what's happening in the news.