Student Loans Question

[emm]

I have two federal student loans of $3,500 currently outstanding. I graduated college in May and am in the grace period for now.

AES sent me an offer to lock in my grace period rate before "my rate increases by .6%." By consolidating I can "lower my payment by as much as 53%."

Im like a child lost in the woods when it comes to the world of lending. Is taking out a consolidation loan a no brainer way to go or a scam?

Also, I have enough to pay off the loan entirely right now (if thats even allowable). Should I be making the minimal monthly payments or the largest allowable payment(s)?

Thanks for any advice or for posting any links/resources that I can use to edumacate my ignant self.

['Chair]

If I were you, I'd clean them off my balance sheet asap.

the mathematically correct answer is likely different.

what's your rate? are we talking stafford or perkins loans?

[johnnylovescandy]

You can pay loans off in full at any time w/o penalty. They're offering to extend your term, hence, reduce your payment. If you any credit card balances with higher interest rates, pay those off first.

I suggest visiting www.richdad.com to begin the educational process...

[kidpokeher]

I consolidated my loans a long time ago so the info may have changed but at the time there was no "deal" in consolidating. They simply combined all the loans into one jumbo loan and the interest rate was the average of all the loans. In other words, if one of your loans is at 7% and the other 8%, your consolidated interest rate would be 7.5%. The interest rate at the time was retarded since I could (and did) move the loans to an unsecured credit card for an even lower rate. The banks seemed unable to offer any kind of deal and I assume it's because they are required to consolidate all student loans this way. Your monthly payment will likely be lower, but all that means is you'll be paying more in interest if you only pay the minimums each month.

Advice is standard with student loans as with any other debt. Concentrate on paying off whatever is the highest interest rate first, then work down the list.

[dazraf69]

Not to hijack the thread. But I too recently consolidated my loans with Nelnet. Rate seems to be around 6% ( If I had the loan two years ago I guess i would have had a much better rate). Anyhow is this standard or are there better alternative routes?

[kidpokeher]

I got the impression that the banks didn't have any flexibility on what rate they could offer you. Plus, soon after I consolidated, the loan was sold off to someone else so it doesn't seem to matter who you consolidate with.

I might be wrong, though.

[Amylane]

I consolidated my loans with the Educational Loan Company, because, well they had the lowest rate reduction, but really because they have a 15day grace period. That was huge, because 15days usually has 2 paychecks in that time period, so if I ever can't pay the loan from one paycheck, I have time enough to get it with the other. That's pretty flexible and it gives the best odds on making payments and getting that rate reduction.

[IdealFugacity]

[ QUOTE ]
I consolidated my loans with the Educational Loan Company, because, well they had the lowest rate reduction, but really because they have a 15day grace period. That was huge, because 15days usually has 2 paychecks in that time period, so if I ever can't pay the loan from one paycheck, I have time enough to get it with the other. That's pretty flexible and it gives the best odds on making payments and getting that rate reduction.

[/ QUOTE ]

You, friend, need to read some of the other posts in this forum (and not the ones about sticking all your cash in stocks!) if you're living THAT hand-to-mouth. And cancel your internet subscription to save some green when you're done.