Tuesday, June 16, 2009

Student Loan Consolidation Update

Follow-up to financial aid post a few days back.

The federal government has come out with a new consolidation scheme for those stuck in higher interest rate loans. Which should sound awesome to many students. However, for those that already consolidated after July 1, 2006, you are stuck with whatever rate you got at that time.

http://news-reviews.org/finance/record-low-student-loan-interest-rate/

The worst part about all of these loans is they reset to the relative same number of years.

For instance, if you are currently in year 3 of 10 years of repayment, your new consolidated loan could spread that out yet again, over 10 years. The actual interest paid COULD be MORE than what is currently going to be paid if the individual keeps on paying current rate for another 7 years.

One other note of interest, especially to medical school students, never under estimate the value of working in the non-profit sector while taking pre-req courses.

2 comments:

Sam said...

I'm doing well. Since we last spoke I've gotten engaged and have been unexpectedly looking at a house. Considering my last e-mail, that's an ironic situation.
I had not heard of this consolidation plan until your post, but I may benefit. The article is not very clear on the details of the program. Upon a search, I was not able to find little information outside of a ton of other articles, which regurgitated the same broad information in the article you linked.

It sounds like the consolidation may only be for stafford and plus loans. Are borrowers supposed to go to their servicing company (i.e. wells fargo, sallie mae) to get this done or go direct to the government consolidation agency? Also, the article never discusses how credit, capacity, and capital play into qualifying.

If your still up for a beer, let me know. I didn't hear from you after my last reply.

A Doc 2 Be said...

Congrats on engagement!! That's great news and the timing if very good for house buying. Lucky you!

I will find other information on consolidation post 7/1/09.

Thanks for continuing to read - let me know if other things would prove helpful!