While I won’t be graduating until October 2015, I will not be applying for anymore private student loans. Given this, and the current interest rate I’m paying, I am trying to consolidate my private student loans prior to my finishing school. I have about $60K in private loans at 9% interest (which I was told was a great rate at the time), I have an excellent credit history and rate. The problem I’m running into is that most lenders do not work with my school. I’m not understanding what this has to do with my consolidation as the loans have already been approved and are my responsibility and have no direct relation to the school I’m attending. If the school default rate is a problem but the loans are under my name and a new lender would be working with me, I don’t understand. Of the top four listed companies listed on the Sherpa website only DRB is willing to work with me, but even they won’t touch the loans until August of 2015 at the soonest, but would prefer to wait until October or even November. My question is why does it matter where I’ve attended school?
Also just for confirmation I should consolidate private loans separate from Federal loans, correct? I have an additional $40K in direct sub and unsub Stafford loans, about 11 of them but all with the same servicer.
May 3, 2014
Lots of great questions.
First of all, it is awesome that you are already thinking about ways to reduce your interest rates and keep your loans under control.
To answer your question about why the school matters, it all goes back to the statistics. On average some majors make more than others, same with schools. Similarly, the default rate varies by school, by program, etc. These factors matter more for some consolidation companies than for others.
As far as keeping your private loans separate from your federal ones, it is usually a good idea. Private lenders can’t compete with federal perks like the income based repayment plans and student loan forgiveness programs. After you are in repayment for a bit, if it becomes apparent that you won’t be utilizing any federal “perk” it might be worth exploring private consolidation of federal loans.
My last thought would be that you will probably have much more luck with private loan consolidation after you graduate and have a steady income. The companies that offer private consolidation can offer the low rates they do because they are very careful to lend to people who have a high likelihood of paying back their loans. Once you are able to show you have a solid income to go with your excellent credit history you may find you have better opportunities.
Your best bet might be to do your best to keep your credit score high and wait until you can demonstrate a good income. That 9% hurts for sure, but if you are less than a year away from being able to lock down rock bottom interest rates, waiting might be best in the long run. You have to evaluate yourself as a loan candidate now vs. what you will be in the future. If you don’t think you will be a better candidate in the next year or so, then now is definitely the time to see what you can do.
Good luck and keep us posted on how the process goes for you!
So, here’s the result so far. Gotta love Sallie Mae. Last week I spoke to them regarding two current loans (totaling $60k) and requested that they “reconsider” the interest rates, currently 9.25% and 9.125%. They wouldn’t stating that they no longer “refinance/consolidate” student loans. I stated I needed a new loan for this year of school (graduating in October), in the amount of $60k, applied for a new loan, waited until today to hear back from them that the loan was approved at 2.75% (2.5% if $25/mo auto deduct payment). So I “refinanced” my own loans through Sallie Mae. I will now need to work with the school to write me a check when they get the money and pay back my first two loans. I saved myself 6.5% interest over 15 years on $60k. Thank you and good night Sallie Mae. Step one, done. On to step two, the school.
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