Consolidating Now v. Waiting | 04.01.08
If you are looking to consolidate your Federal loans now..you may want to wait a few months….but only if you have loans from before July 1, 2006. Here’s why…
Stafford loans taken out before July 1, 2006 are variable rate loans (assuming they have never been consolidated)…and these variable rate loans are reset every July 1. This July 1st the rate may be decreasing, in which case you would want to wait to consolidate until this rate change occurs. The rate should be announced sometime in June…so you will know before it happens.
If you just graduated and all of your Stafford loans were borrowed after July 1, 2006, you can consolidate whenever you would like, as your rate will always be 6.8%. This is because the rate changed from a variable rate to a fixed rate on July 1, 2006. All of your loans are already fixed in at 6.8%…consolidating them will not change the rate, but it can lower your monthly payments.
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Does the same apply to PLUS loans taken out after july 1, 2006? in other words, is there any advantage to consolidating plus loans, take out after july 1, 2006 (currently they are at 8.5% fixed) after july 1st this year or can I consolidate now and the rate would be the same?
Brian
I would like to add this link as I have found that this site has given me a lot of great information and links. Hope that this will help.
I am so confused!!!
Will the July 1 new rate affect me if I’m looking to consolidate my private loans received before 2006?
Should I consolidate my federal and private loans under one loan?
So, it appears as though the author has ignored everyones questions. I wil try to answer based on my conversation with an AES advisor just moments ago. I also have loans that were taken out both before anad afer July 1st, 2006. To explain this, let me provide an example.
ex: 2 loans before 07/01/2006 @ 6.2% – 2 loans after 07/01/2006 @ 6.8%. The new rate is 4.25% (how nice would that be).
So, what’s done is this: Both loans before 07/01/2006 will now be 4.25% but those after will be weighted with those before, for an average. So, average 2 loans @ 6.8 and 2 @ 4.25 and you would get an overall rate of 5.525%.
In other words, it’s worthwile to wait. Hope this help you all – it certainly helped me!
I also have loans from before july 1, 2006 as well as after. My first payment is due June 19. i am unsure if i should just consolidate now so i dont chance missing the due date by waiting for the rate to be announced… ANY advice will be helpful! Thanks
I am in the same boat as Latrice, but request some clarification as to the comments posted. My grace period ends June 22nd. The current rates are 6.62% in grace, and 7.22% once in repayment. Do you believe a rate cut July 1st will bring the 7.22% repayment interest below the 6.62% I can get if I consolidate now? Thanks for your help.
Given the current T-bill rate I would be shocked if the rates didn’t decrease significantly. Definitely wait to see what it will be announced as.
Wait until the rate is announced in June. The rate is very likely going to drop significantly. If it doesn’t you have until June 30th to consolidate.
To Whom It May Concern:
I have loans before July 1, 2006 and after. I’m schedule to start my first payment in June of this year, so should I wait to July or do it now?
Thanks,
Latrice
is there any chance that this July the rates could increase?