Student loan consolidation-- who to go with?

[bliss_eternal]

Anyone have any advice on who a safe company would be to go with for student loan consolidation? I've rec'd queries from Sallie Mae and a couple of other companies--

I've tried a couple of the 'blue and progressive' consumer sites, but couldn't locate info for student loan companies.

Anyone have any advice on this one...?

Thanks!
Bliss:)

[not fooled]

1. ANYONE have any info to share?

Same Q. as OP. There are zillions of cos. out there; how to choose? I understand that the actual rate is fixed by the gov't; the difference would be in discounts offered and in service quality.

Anyone w/experiences to share, good or bad, please post.

[ArchTeryx]

2. I'd go with..

Federal Direct Consolidation loan. The Federal government is the easiest to negotiate with and the slowest to default you if things go bad. Plus their origination fees are the lowest that I am aware of.

http://www.loanconsolidation.ed.gov/

You may not get the very LOWEST interest rate with a DCL, but the fact that the feds aren't gunning for you from the first day you take out the loan is more then worth half a point or so. I would avoid all private companies like the plague.

[CitySky]

3. I will second

Federal DL Consolidation experience -
unfortunately, i consolidated when interest rates were MUCH higher (they had started falling, so we thought that THOSE rates were low!) and so I'm paying, and always will pay, much more than I would have been if I had waited.

BUT: I had no problems deferring for a few months when I lost a job. They knock 1/4% off my the interest rate for letting them automatically withdraw the payments from my account each month. I've had no problems with their service at all in the 5 years I've been paying them.

My problems lie only with my interest rate. :cry:

[ArchTeryx]

4. I'd look at this blog:

http://www.generationdebt.org/

It actually covers the consolidation issues pretty well, though posts there are often rare and little commented on. Loan consolidation isn't really on most politicians' radar screens right now.

One way to 'game the system' a bit is go back to community college and take out a small student loan while you are there. This will make you eligable once more for consolidation, but I am not sure how interest rates are calculated in that case.

[CitySky]

5. THAT is a brilliant idea.

Thanks for the tip, and the link.
wow.

[ArchTeryx]

6. It may need more gamesmanship.

When I did my consolidation loan through the feds, I had to take a 'weighted average'. That is, if you take a $100 loan at 4% and have $50,000 at 9.0%, your consolidation interest rate won't change very much. But even there, the system can be gamed (for a small fee).

See if you can get into a Master's program for anything at all, even a low level Master's. Grad students often have access to near unlimited student loans. Get out as many student loans as you can at a new 'lower' rate, and pay off your old loans at the higher rate. Once you've done that, then consolidate the series of new loans and lock in the new, low interest rate.

I did alot of this when I got into a new PhD program (this was a long planned, lucky accident on my part). I managed to get my average student loan rate down to 3.7% from nearly 9% after 2 years, and lock the rate in.