Question for financial aid specialists!

[EvilNewbie]

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I am contemplating doing the federal loan consolidation since there are way too many lenders but I have a few questions about the whole idea...

1) They talk about 0.6% rate reduction if consolidated during the grace period but as I understand it, if your rate is 6.8% during school, it will go UP to 7.4% AFTER the grace period expires and you did not consolidate.... However, if you consolidated during the grace period, it simply stays at 6.8% (so it really isn't 0.6% rate reduction from 6.8%)... It just stops it from going up 0.6%, is this correct?

2) If I consolidate one loan with one company and consolidate another bunch of loans with another company, can I re-consolidate them in the future?

3) Is there a point to paying off the accrued interests before graduation? It says that interest is capitalized once payment begins but it simply is just the loan balance + interest = new principal... anything negative with not paying the interest?

4) I heard that you should not consolidate the Perkins loan? Why? Considering that if you have zero chance of negating the Perkins, why not consolidate it?

 

[nontrdgsbuiucmd]

I can take a stab at a few of these.

for #2, the only entity that I'm familiar with that does consolidations is the federal government, not private companies. As far as I know, you can always roll additional loans into your consolidation

#3, no there's not really a particularly great reason for paying off interest before graduation, except that the sooner you pay back the loans, the less overall interest that you'd be paying. But why take out so many loans if you will have the $$ to pay back the interest while still in school? As there are often origination fees, I'd suggest not taking out any more loans than needed.

#4 - only reason I can think of for not consolidating a perkins loan, or not consolidating loans in general, is that often each loan taken out over the academic career has a slightly different interest rate. If & when your income goes way up, if you haven't consolidated, you can pay the minimum on the low-interest perkins loan and much more on the other, higher interest loans. Once you consolidate, the overall interest rate becomes the weighted average of the interest rates on each individual loan.