Student loan consolidation

[cael]

Welp, I finally got/took control of my husband's student loan account, which they claim he missed 12 payments on so I just dropped $1800 on them to catch him up. Ugh. Last fall they thought he had finished school because he didn't register, and he didn't know what to do and ignored it until last month... there goes a grand out of savings. Oh well, at least I can pay it now and won't have to worry about him not doing it.

Now my real question... can someone explain consolidation to me? Unfortunately when I graduated, my dad took care of that for me so I have no idea what the process is. DH has 4 loans listed in his account at two different interest rates. Should I look into consolidating them into one loan? Would the interest rate potentially be better? I'm just looking at this for simplicity's sake, not to lower the payments, I don't think the monthly payments will be more than $250 so that is manageable.

In good news, my SL is down to $1500 and my goal is to have it paid off within 3 months! At least I have that..

[tcu2003]

Is he still taking out student loans? You can only consolidate once in his lifetime, so if he's still taking additional loans, you may want to wait. Otherwise, there are a few big players, so you can contact one to see what the rates would be.

[cael]

Nope, he's done taking out loans. He has one more class and I'm going to pay cash for it, and it's CC so luckily it's cheap. I didn't know you can only do that once ever, good to know. If he wants to finish a bachelor's sometime he'd have to go part time and we'd cash flow it if we could, but that'd be at least several years down the road.

What are some places to check out for rates, would I find that info from the Dept of Ed?

[The Captain]

Oct 17, 2015 12:55:44 GMT -5 cael said:

Welp, I finally got/took control of my husband's student loan account, which they claim he missed 12 payments on so I just dropped $1800 on them to catch him up. Ugh. Last fall they thought he had finished school because he didn't register, and he didn't know what to do and ignored it until last month... there goes a grand out of savings. Oh well, at least I can pay it now and won't have to worry about him not doing it.

Now my real question... can someone explain consolidation to me? Unfortunately when I graduated, my dad took care of that for me so I have no idea what the process is. DH has 4 loans listed in his account at two different interest rates. Should I look into consolidating them into one loan? Would the interest rate potentially be better? I'm just looking at this for simplicity's sake, not to lower the payments, I don't think the monthly payments will be more than $250 so that is manageable.

In good news, my SL is down to $1500 and my goal is to have it paid off within 3 months! At least I have that..

Does your husband have any idea how lucky a man he is?

[cael]

He always says that he's sure he'd be in a ditch or shack somewhere right now with no money if I didn't stay on top of his shit, yes. it works out since I'm OCD and would rather do things myself so I know they get done, so as long as he gives me all the info on stuff I'm more than happy to take care of it. Believe it or not he's gotten a lot better in the 8 years we've lived together, but I'd tried to get him to get this straightened out and he got overwhelmed.

[Knee Deep in Water Chloe]

Hmmm...are the federal or private loans?

[haapai]

You can start your (husband's) homework here. 

Unless your husband has a ton of loans from several lenders, you may gain very little from consolidation except convenience.  Consolidation is optional.  Consolidating a bunch of small loans into a large one may allow you to extend out your payments for a longer period of time.

Consolidation has quite a few downsides and it's a pretty valuable card to play if you are having trouble making payments, so you might want to hold onto it if you can. 

[haapai]

Now, that I've re-read what's on that page, I remember how much I dislike it.  It doesn't contain a table that explains how differing loan amounts will qualify for different repayment terms.  It pushes you toward a calculator instead. 

The table that they should have included to help you make decisions isn't any type of secret but it can be surprisingly difficult to find.  Let me see if I can find a link that includes it. 

[haapai]

Okay, here's a link to a page that contains the table that I spoke of.  Finaid is a dead site.  It's no longer updated.  However, prior to it going dormant, I looked up this table several times and it was never indexed for inflation.  Ergo, the information on this site should be identical to the information embedded in all the loan consolidation calculators that you're being pushed toward. 

[haapai]

If you tell us the amounts and interest rates, we might give better advice. 

No, your interest rate will not improve.  A consolidation loan calculates the weighted average interest rate and rounds up to the nearest eighth of a percent.  Once you consolidate loans, you lose your ability to target the loans with the higher interest rate or the smallest balance. 

You lose a few other valuable options too, which is why you might want to just sign up for electronic payments and start studying your options. 

FWIW, if the loans are all with the same servicer, you should only have one payment whether you consolidate or not. 

[cael]

Thanks haapai, I'll check those links out. They're federal loans, totaling now about $11k, split into 4 loans. Two are at 6.8% and two are at something like 3.6%? (I can't login to the servicing site right now to double check, something's wrong with their page). One of the loans is something like $800, another is one-or-two-thousand something, and the other two make up the rest - I think the larger loans have the higher rate. It does appear it's all rolled into the one payment, I should be able to see what the actual monthly payment will be after the payment I just made processes tomorrow.

Sounds like maybe consolidation isn't worth it right now, since I don't think we'll be looking to lower the monthly payments. If the interest rate wouldn't improve and if I may have the opportunity to put more cash towards the higher rate loans first, I'll probably just leave them alone for now.

[haapai]

The important thing to be aware of is the $10K cutoff for 15-year extended payment plans.  Once the total balance falls below $10K, the loans will only be eligible for 12-year extended pay. 

The total loan balance isn't too far from that milestone.  You can predict when you will hit it by cranking out some debt amortization tables for the standard, 10-year, repayment plan that your husband was enrolled in by default. 

It's possible, if your husband's loans are all with one servicer, that he could switch his repayment option to extended pay and get 15-year repayment without consolidating.  I've never been too clear on that wrinkle. 

[cael]

Honestly I'm not too concerned with extending the repayment period, I'd rather get it paid as quickly as we can. I may just leave it alone. I was really most interested in consolidation if it would possibly get a better interest rate.

[haapai]

Nope, consolidation won't do that.  On the other hand, your husband's loan agreement might contain a quarter point discount for electronic payments. 

[cael]

I did notice that advertised on the main page of his account, so I'll probably do that. Won't help much but every little bit counts - for some reason I never did it for my loans, I preferred setting up the payment myself every month... I think because I paid more than the minimum most months for a long time.

Thanks for all the advice haapai!

[garion2003]

If the interest rate is your main concern, you may want to try a refinancing option with a private lender. They will refi federal student loans - I think you need to have excellent credit to qualify, but this is YM, so everyone has good credit, right?

Only a few lenders are doing this, a search will probably turn them up. As I recall Citizens Bank and SoFi were on the list.