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are any financial institutions consolidating right now? i thought all that was put on hold because of the economic worries.

By javajunkie on Jun 4, 2009

Don't consolidate, you will be paying more money in the long run with interest..

By Allen on Jun 4, 2009

No. Your consolidation loan is binding. There is no going back once you've done all the paperwork and the process is complete. However, double check with your lender. I don't believe you lose deferment options (like if you return to school) but you do lose many cancellation provisions by consolidating.

By siren0327 on Jun 5, 2009

wow – a lot of questions. let's start with the easy ones, first.

Student loan interest IS tax-deductible. The maximum amount you can claim each year is $2500. If you paid more than that, you can not deduct anything over $2500.

(Can I assume that your starting salary won't be in excess of $55,000? If you do make more than $55,000, you won't be able to take the full deduction for student loan interest.)

Do you have to be employed full-time in order to consolidate? No.

Should you consolidate your students loans? Ah, now that's the tough one.

Here's what the Department of Education has to say about consolidation loans:

Always Consider the Cost

"You should keep in mind that although consolidation can simplify loan repayment and lower your monthly payment, it also can significantly increase the total cost of repaying your loans. Consolidation offers lower monthly payments by giving borrowers up to 30 years to repay their loans. So, you'll make more payments and pay more in interest. In fact, in some situations consolidation can double your total interest expense. If you don't need monthly payment relief, you should compare the cost of repaying your unconsolidated loans against the cost of repaying a consolidation loan. You also should take into account the impact of losing any borrower benefits offered under non-consolidated repayment plans. Borrower benefits, which may include interest rate discounts, principal rebates, or some loan cancellation benefits can significantly reduce the cost of repaying your loans.

Once made, Federal Consolidation Loans cannot be unmade. That's because the loans that were consolidated have been paid off and no longer exist. Take the time to study your consolidation options before you submit your application. This checklist has been designed to help you determine whether and how you should consolidate your loans."

I hope that helped, good luck!

By not in kansas anymore on Jun 5, 2009

I'm looking for loan consolidation help as well. So far, I've found this information on one of my current lender's websites.

https://www.mycampusloan.com/static/html/infocenter/LoanConsolidation.htm

They reccommend http://www.EdLoanConsolidate.com. I havent tried anyone yet, but its worth a shot. Good luck!

By tomvesey0505 on Jun 6, 2009

By k_albarron on Jun 6, 2009

Practically any type of loan can be wrapped into the debt consolidation process. Common types include finance charges, late fees and overdraft charges, credit cards, personal loans, utility bills, medical bills, car loans, store cards, gas cards and back taxes. A debt consolidation loan<!–allows you to condense your monthly payments into a single, simple bill, while lowering your interest rates and helping you pay down your debts more quickly and easily. It is also an essential tool in avoiding the much more serious step of declaring bankruptcy.

http://best-loans.awardspace.com/Loan-Consolidation.htm

Unlike bankruptcy, in which debts are cancelled and your credit rating collapses completely, debt consolidation loans are essentially a type of refinancing, where several–>old loans are replaced with a new one that has more favorable terms. Your loan consultant will negotiate with creditors on your behalf, so you’ll no longer have to deal with harassing phone calls and daily mail.

By KristenM on Jun 7, 2009

Okay, Artsty – let me see if I can explain this so that you can follow it easily.

First of all, I'm assuming that you are receiving statements from one or more loan companies every month. If not, you must at least be receiving a statement from one (or several companies) in January of each year – that's when they send you a summary. The first thing you'll need to do is find all of these statements and look them over.

Many of the actual lenders may not be contacting you directly, because it's very common for lenders to use another type of company, called a "loan servicing agency" to help them stay in touch with you. The largest loan servicing agency, and one that you're almost certainly dealing with is a company called "Sallie Mae". Check and see if you have correspondence from Sallie Mae.

When you have found as many of the statements as you can, you can call the customer service number on your statements for more information, particularly about your loan balances.

You should also have copies of the "Promissory Notes" that you signed every time you agreed to a new loan. The lenders are required to send you a copy, and you should have kept these in a very safe place, because these are the legal contracts that you signed – the terms of the loan(s). Each promissory note will tell you how much the loan is for, and they'll also tell you how much you will eventually have to pay back on each loan.

As for consolidation – this is a very complicated lending question that I would REALLY REALLY REALLY recommend that you discuss with a knowledgeable financial advisor. Your mom and dad are fine if they know a lot about loans and interest rates and repayment schedules and things like that, but if they're also a little intimidated by loans, you should make an appointment to speak to a family friend, or an accountant, or a loan officer at your bank.

Consolidation loans are promoted with the "pitch" that they make your life easy by allowing you to take a bunch of loans from different lenders and gather them all together into a single loan with just one lender and one payment. They are also "sold" with the suggestion that consolidation can save you a lot of money by lowering your monthly payment.

Whether a consolidation loan is right for you depends on a lot of factors that the consolidation lenders don't always tell you about in their ads and emails. You asked me to keep this simple, so I won't go into a lot of detail about what those factors are.

Just keep a few things in mind:

Consolidation loans do not cut your monthly payments because they are "nicer" loans. Consolidation loans cut your monthly payments because you will make many, many more payments over a longer period of time.

Suppose you owed me $100 and promised to pay me back $50 a week this week and $50 a week next week. Your car broke down and you had some other bills due, and you come back to me and say that you can't pay me the $50 this week – is there any way we can make another arrangement?

"Oh, absolutely." I say. "Let's do this. Instead of paying me $50 the next two weeks, you can pay me $10 a week for the next 15 weeks.".

You think "Wow, only $10 a week. That's much better than $50. I can afford that!".

But look what's happening – I'm not just being 'nice'. You're only going to pay me $10 a week now, but you'll be paying me $10 a week for the next 15 weeks. What's that mean? It means you'll be paying me back $150, not the $100 that you originally owed me.

I did you a "favor" by letting you pay me less, but we stretched it out over more weeks, and you wound up paying me a lot more for the "privilege".

That's how a consolidation loan works – your payments will go down, but you'll pay the loan for a lot longer and you'll almost certainly wind up paying a lot more in the end.

That's why I say – get some good advice – make sure you understand just how much it's going to cost you to make lower payments for a longer time. Then decide if the consolidation loan is worth it for you.

It might be, but it might not.

Good luck!

By ArtsyAquarius on Jun 7, 2009