by Ashley
The title of this post has nothing to do with anything, except it reminded me of the lyrics “conjunction junction, what’s your function” (from the School House Rock theme song).
This is a quickie post, but something that may solve some of the high student loan APR issues that I’ve been talking about recently (see discussion here, see list of debts and APRs here).
Any readers consolidate their student loans?
Have good experiences? Bad experiences? What are your thoughts??
I’ve heard that you can only consolidate a single time, but that would be okay with me. My credit has vastly improved across the last year as I’ve paid down my debts so I think I’d qualify for a lower APR. I don’t know the ins-and-outs. Would this impact my income-based repayment? Can I consolidate through the same company I already have or do I have to use some outside company? How does all this work???
For the record, IF (big if) this happens, I would absolutely 100% only do this in order to lower my APRs. I would not start spending money elsewhere or think this means I can pay less toward my student loans. It’s strictly an interest rate thing.
Thoughts? Experiences? Advice?
I assume I’d need to start by calling and speaking to a representative at one of my loan companies (I have two companies: Navient and ACS). Before I even take that next step I’d just like to poll the audience (YOU!!) and get your opinions on the matter.
Thanks in advance!!!
Hi, I’m Ashley! Arizonan on paper, Texan at heart. Lover of running, blogging, and all things cheeeeese. Freshly 40, married mother of two, working in academia. Trying to finally (finally!) pay off that ridiculous 6-digit student loan debt!
I consolidated my loans last year and it was the best decision for me. My interest rates were sooooo high, and I had quite a few monthly payments which was confusing. Now, I have one payment, shaved almost 4% off my interest rate and am able to track my progress much easier. Consolidating has made paying down my student loans easier, too. My monthly income goes toward my student loans and my husband and I live off of his income.
All of my consolidation was done through Sallie Mae (now Navient). I have heard of other consolidation businesses popping up, I would make sure to do research on those before committing.
If I remember correctly, there were options about how your monthly payment could be calculated – income-based, or a scale, etc. But I would look into this as well, just to make sure. Good luck!
I have commented regarding student loan debt in the past. I have done a lot of research on the pros/cons regarding consolidation. I probably bring a unique perspective, but can relate to the student debt loan mountain. I had no undergraduate loans but grad loans and law school pushed my student loan debt at one time north of $185,000 about 5 years ago. I now owe about $150,000. The job market for lawyers is horrible and I have owned my own firm for the last 5 years (I am a second career attorney after spending 10 years in K-12 education). A relocation for my spouse’s job forced us to move from Big City A to Big City B this past summer. My practice has been essentially winding down for the last year and job prospects for me are slow in coming in the new city even though it is a large market.
The move was necessary and a good decision, but I still haven’t changed my tune about consolidation given my UNIQUE circumstances. Upon graduation I had 8 loans with interest rates between 0.05% and 6.8% (some of these were grad plus loans). All but one loan are federal loans. My minimum payment per month is about $1050 (after paying off one loan) on the 25-year repayment plan. On most of my loans I have 19-20 years left. Yes, my student loan debt is larger than some people’s mortgage. Consolidation would seem to make sense but I have decided to take a wait and see approach. My husband makes a good living and I will be reemployed at some time. I can afford the minimum payments per month and then some.
If I consolidate, yes, they will all be under one payment, but I cannot fathom chipping away at at large balance of $150,000 without some small wins. Additionally, my interest rate will be calculated on an average of all the rates, which given the large spread of the interest rates would be somewhere in the high 5’s. I have some loans that under that interest rate and are fixed. Therefore, I have chosen to apply more each month to the highest interest rate and thus extinguish it and along with the required payment forever. I have paid off 1 loan and will have two more paid off in the next 12 months, thus dropping my minimum to under $700 a month. So begins the snowball. My goal is to have all them paid off in the next 5 years. I do realize that my situation is unique and my husband’s income affords us flexibility many do not have. When I am re-employed FT virtually my entire salary can go to savings, retirement, and debt reduction. This is gravy on top of gravy.
If you cannot make a snowball payment or if your interest rate spread is not as great as mine I think consolidation makes a lot of sense! I offer another perspective because once they are consolidated they cannot be paid off one at a time. It becomes a more manageable payment and sometimes you get a better interest rate, but now you are looking at a mountain of one number rather than a few moguls that make up one mountain.
I consolidated my graduate loans and took it from a $500 payment to $360. I also did this with my undergraduate loans several years back when interest rates were 4%. I prefer the one payment rather than a bunch of small ones. I still have about $3750 for my undergraduate (ACS) and $36400 for my graduate loan (Nelnet). I can easily kill off my ACS loan but I am pretty much laser focus on the Nelnet with the higher balance and interest rate. Consolidation worked for me. I’m not sure how it will affect the income based repayment as I just went with the standard consolidation plan.
Would consolidation impact your income-based repayment plan? Is the income-based repayment plan for all loans are just a few?
you can only do IBR with goverment (FFEL/Stafford/perkins/etc). The new APR will be a WEIGHTED AVERAGE of your current APRs, so it really is more to make the payments easier, not necessarily lower APR. And you can consolidate and still do IBR. go to studentloans.gov and read about it!
But in all honesty, but you should be able to contact the financial aid office at your graduate university- they should counsel you about this as its their JOB and they know the nitty gritty details. i did it for professional school loans and it makes things SO much easier.
And yes, you can only consolidate once (unless you get a new loan issued in the future, in which case you can consolidate again to add in that loan)
Wow, thanks for all the helpful info! I’ll probably wait until after the holidays, but will definitely give my grad school a call to talk more about it! Thanks!