College Loan Consolidation
I noticed no one responded to your query. I was a Federal Consolidation Loan Advisor when the rates dropped from the highest to there lowest ever. There are a few things you need to know first.
Are they Federal and Private loans or just Federal? Are they Stafford loans(in his name) or Parent PLUS loans(in parents name only)? When one consolidates there is no longer a grace period. There is deferrment and forebearance and the death benefit. All loans must be in good standing. There are all kinds of little things but I have posted the most common guidelines not knowing the particulars of your situation.
You cannot mix fed and private loans together. Fed variable rate loans adjust once a year period. July 1st of each year for 10 years. Rate stays the same all year. Maximum rate cap on Stafford is 8.25 and Plus is 9.00. There is a 6 month grace period after graduation for Stafford loans which may coincide with the July 1 new rate deadline. Talk to the consolidation lender about this because there are special ways to do this. Loans take about 60 days to close. No cost to consolidate. Some may give a slight rate discount to get your business,or offer a discount for direct withdrawal of the payments.
If your Fed loans are all with one lender you must consolidate with that lender only. Government rule-no matter how many " you must call us now letters" from a ton of varying lender letters you get in the mail. Most are junk and come on letters. If you have Fed loans with more than one lender you can consolidate with anyone, There are Direct Fed Loans and and FFLEP Fed Loans with private lenders.A college used one or the other or both. Direct loans offer a discount rate .25% for 12 months of ontime payments. If you payoff the loan or consolidate it less than 12 months you lose that credit.
If they are all Direct Loans you consolidate with US Dept of Education. If they are with one lender like Sallie Mae then call them. If they are with multiple lenders call Sallie Mae. Students that have gone to more than one college may have multiple Fed Lenders. You can mix Direct and FFLEP Fed same type loans together. You can only consolidate once UNLESS you have another Fed loan to add to the mix should the student continue to borrow.
Warning: continue to pay on those loans until they the new Consolidation loan is done and the old loans are closed. Many people do not follow this and it puts them in default and then they cannot consolidate at all.
While Fed loans are 10 year payoffs,consolidations are not. Prior to the new rate increases one consolidated to lock in a lower rate,lower the payments and extend terms of years to payoff. No prepay penalty either. Terms of years are 10-30 depending on outstanding education debt including private ed loans. Although one cannot add private loans to the mix remember to include the dollar value because it impacts the terms of years on the consolidation.
Perkins loans can be added to the Consolidation loan. Perkins were 5% fixed and not a variable rate. So sometimes it is wise to keep it seperate depending on the rate.
You can do this online but may want to speak with a Consolidation Specialist first. Depending on the current rate it may not be the best thing to do right now if rates are near the peak. Unless rates were to drop considerably by 1-2 points then one would want to wait. If he consolidates in his grace period the rate will be lower than if he does this after that window. It is about .6% different.
http://www.dlssonline.com/index.asp
www.salliemae.com
Is your head spinning yet?
