To consolidate student loans or not?

[miamidoc2b]

A friend of mine asked me to research this and I tried but am not up to date in the financial arena. So I figured I might as well ask you guys here.

He has tons of federal loans from Sallie Mae and is still a resident. He was wondering whether it would be a good idea to consolidate or not. Loans are as follows:

Consolidation - UNSUB - $23,822.44 3.375%
Consolidation - SUB - 17,314.71 3.375%
Stafford - SUB - 4,256.99 2.36%
Stafford - SUB - 4,304.75 6.8%
Stafford - UNSUB - 6,125.79 2.36%
Stafford - UNSUB - 6,679.21 6.8%
Graduate PLUS Loan - UNSUB - 54,893.50 - 8.25%
Graduate PLUS Loan - UNSUB - $34,757.19 - 8.25%
Global Health Stafford Loan - SUB - 8,467.39 -6.8%
Global Health Stafford Loan - SUB - 8,472.51-6.8%
Global Health Stafford Loan-UNSUB 12,793.62-6.8%
Global Health Stafford Loan-UNSUB 14,606.75-6.8%

Thoughts? And if consolidate, with who? What does the whole process entail?

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[NoDoz]

A friend of mine asked me to research this and I tried but am not up to date in the financial arena. So I figured I might as well ask you guys here.

He has tons of federal loans from Sallie Mae and is still a resident. He was wondering whether it would be a good idea to consolidate or not. Loans are as follows:

Consolidation - UNSUB - $23,822.44 3.375%
Consolidation - SUB - 17,314.71 3.375%
Stafford - SUB - 4,256.99 2.36%
Stafford - SUB - 4,304.75 6.8%
Stafford - UNSUB - 6,125.79 2.36%
Stafford - UNSUB - 6,679.21 6.8%
Graduate PLUS Loan - UNSUB - 54,893.50 - 8.25%
Graduate PLUS Loan - UNSUB - $34,757.19 - 8.25%
Global Health Stafford Loan - SUB - 8,467.39 -6.8%
Global Health Stafford Loan - SUB - 8,472.51-6.8%
Global Health Stafford Loan-UNSUB 12,793.62-6.8%
Global Health Stafford Loan-UNSUB 14,606.75-6.8%

Thoughts? And if consolidate, with who? What does the whole process entail?

As far as I know, only the Dept of Ed is consolidating loans now. A lot of the lenders or intermediaries like Sallie Mae, ended up selling their loans to the Dept of Ed, and/or stopped doing consolidations entirely.

https://www.dl.ed.gov/borrower/BorrowerWelcomePage.jsp

I would advise AGAINST consolidating all the loans in your friend's case. What ends up happening with the Dept of Ed loans consolidation is...

1) You fill the online application.
2) They send you a paper packet with all your loans.
3) You check off the ones you want to consolidate
4) They add up all the loans you want to consolidate, do a weighted average for the interest rate, round up to nearest 1/4%.
5) They pay off the loans you consolidate.

In your friend's case, I would consolidate 3.375% and 2.36% ONLY. Then make the minimum payments on the consolidated loan while working hard to pay off the rest in order of highest interest rate.

Keep in mind he will LOSE ANY BORROWER benefits once he consolidates so he may want to wait to consolidate those low interest rate loans. If they are variable rate loans...the interest may go up if he waits so unless the borrower benefits are excellent, I would consolidate those soon.

I believe the interest rate % for variable rates resets 2x a year (I THINK May and Nov). I doubt interest rates will drop any lower than that. Good luck.

 

[The White Coat Investor]

Why not do an app-o-rama, get about 30 credit cards, take out cash advances on all of them, pay off the student loans, and then declare bankruptcy. Your credit will be back to normal about the time you want to buy a house a few years out of residency anyway.

Just kidding (kind of.) It used to be easy to consolidate at low, low rates. (My classmates are at 1.9% fixed.) Not so easy anymore. If you can't lower the interest rate by consolidating, I see little reason to do so. I'd just start throwing extra money at the low-balance, high-interest, unsubsidized loans.. I'd probably go after the Grad Plus ones first. Do the debt snowball thing.