09.03.09 | Student Loan Consolidation: Myth vs. Reality
There has been a lot written and said about federal student loan consolidation over the years. The point of this blog is to debunk three common mythes floating around the Internet about consolidation benefits.
The consolidated interest rate changes every July 1.
MYTH. The reality is variable rate Stafford loan rates are subject to change each July 1, which directly impacts your consolidated interest rates.
Like a home mortgage I can refinance my student loans multiple times
MYTH. The realty is that it’s a one shot deal. When you consolidate your federal loans you are locked in for life at the interest rate. I know, seems pretty ridiculous doesn’t it?
I need to consolidate within six months of leaving school or I’ll lose my eligibility
MYTH: Consolidating within six months may be beneficial to students with variable interest rate Stafford loans due to the fact that a lower interest rate is extended to you during that six month window (2% versus 2.5%). However, it is not required that you consolidate within six months. You have an indefinite time frame in which to consolidate your student loans.
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September 13th, 2009 | #
I have a consolidated loan from undergrad. Now I have a new loan from my master’s program. I want to consolidate them together how can I do that? The consolidation company with my undergrad loans said they can’t add my grad school loans. Can I go to someone else and consolidate them all together?
September 18th, 2009 | #
It is true that consolidating student loans is a one shot deal…Except…If you add a previously not consolidated student loan to your current consolidation loan, you can have your interest rate averaged out between your current rate and the market rates. It doesn’t affect your interest rates much, but it’s still always a good idea to leave one student loan out of the consolidation, so you have the opportunity to reconsolidate later.
September 20th, 2009 | #