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Are student loan consolidation companies legit.?


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5 Responses to "Are student loan consolidation companies legit.?"

  1. El Diablo says:
    Npt usually a good idea, but can be;

    Increased Interest Costs
    understand that consolidating your student loans simply extends the repayment term, which means that you will pay more interest over the life of your loan.

    But note that you can always prepay your loan without any penalties. By paying a little extra each month, you can reduce your repayment term and the total amount of interest paid.

    Higher Interest Rate
    understand that the interest rate on your consolidation loan may be slightly higher than the current interest rates on your student loans

    Fixed Interest Rate
    your federal consolidation interest rate is fixed — meaning that you won’t benefit from future declines in interest rates.

    If rates were to decline further, you can use other consolidation options such as your home equity to payoff student loan balances

    consolidating your federal education loans have fewer deferment, cancellation and forgiveness options than your original loans

    When shopping for a consolidation loan, be sure to ask what benefits are offered. Lenders, for instance, may offer a rate discount of a quarter of a percentage point if electronic payments are made directly from your bank account. That’s what Sallie Mae is offering borrowers who consolidate after July 1. In addition, those consolidating at least $10,000 worth of loans will get a 1 percent discount if they make 48 consecutive on-time payments.

    You should also be selective about which federal loans you consolidate. Your consolidated interest rate is based on a weighted average of the interest rates on your current loans, rounded up to the nearest one eighth of a percent but capped at 8.25 percent. If your highest-rate loan has a small balance, you might be better off not including it since it will raise the weighted average of your consolidated rate, Chany said.

    The bottom line is, there is no one right answer for everyone when it comes to consolidation. You have to weigh your financial needs with the repayment options available to you. “It’s not a one-size fits all,” Chany said. “You really have to do your homework.”

    For help in figuring out whether a loan consolidation makes financial sense for you, use the U.S. Department of Education’s Direct Loan Consolidation calculator or Sallie Mae’s repayment estimator.

  2. mickiinpodunk says:
    Usually they are, especially folks like SalleMae and NellieMae. These can be a good deal for you under certain circumstances.

    Are you making multiple loan payments to different servicers on different loans? Are you having difficulty making your payments and need a longer repayment period or lower payments? Are you past due on the loans and trying to avoid a default? Or are you past due and trying to go back to school? All of these are legitimate reasons to consolidate, and to find a reputable consolidation loan.

    However, you have to balance this against a longer repayment which means more interest paid. Also you can usually only consolidate once and if doing this frees up money that you will only waste on something else (like credit cards), is it in your best interests to do this?

  3. marebear31485 says:
    Most are legit, but I wouldn’t say they are necessarily the best option. Keep in mind if you DO consolidate right now the interest rates are very high, and if the federal loan interest rates go down on July 1 (if yours isn’t already fixed) then you will always be fixed at the higher rate. If you are going to consolidate look at several different ocmpanies though. Some lenders will offer “incentives” to consolidate with them. A cash rebate, interest rate reduction after so many on time payments, etc. Also, when you consolidate you are locking in your current rate rounded up to the nearest 1/8 percent. So if your rate is at 7.14 on a stafford loan it will go up to 7.25 when you consolidate.

    If you do consolidate then most times it is going to stretch your loan out over a longer period of time so it will be significantly more interest over the life of then loan.

    Unless you know interest rates are going to go up (this year they aren’t supposed to that I know of) then it is better for you not to due to the interest costs. And if you use a 3rd party consolidator (not your current lender) it can be a huge pain.

  4. robin0408 says:
    Most of them can be iffy. If you consolidate through Direct Loans (government program) or the original lender (Sallie Mae and Nellie Mae are common) you can be assured it is legitimate. You want to make sure that you are not simply refinancing your loan through a private lender if you received goverment funding for your loans. You want to make sure that you are being refinanced through the student loan repayment program so you are still eligible for all of the benefits/safety nets (i.e. deferrment, income contingent plans, etc.), as well as making sure your Title IV priveleges are intact. There is always help if you are having trouble paying back a student loan, conventional loans are not nearly as forgiving.

    Direct Loans refinanced my student loans. They were able to collect all of my outstanding balances and information from all my various lenders, and consolidated at current repayment rates (lower than conventional loan rates).

    This link should give you some information, and a place to start.

  5. Kevin A says: has good ideas and help for student loan consolidation and refinancing student loans

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