|
| Student Loan Borrower |
 Should I consolidate now, or wait?
The rock-bottom interest rates on federal student loans were in effect only through June 30, 2005. But anyone interested in making their monthly payments more manageable and with a heap of student loan debt may still want to check out a federal consolidation loan. When you're just getting started in your career, smaller payments might help to keep your budget from getting squeezed too tight. Keep in mind that after grads leave school, there's a six-month grace period before their loan payments begin.
I consolidated once before; can I do it again?
No. There's no going back once you consolidate your loans. You're stuck paying the rate you locked in on your old consolidation loan. The only exception would be if you make up your mind to go back to school and take out additional loans. In such case you can combine your new loans and your old consolidation loan into a brand-new consolidation loan.
Follow these steps to consolidate
Generally, obtaining a consolidation while still in school is a multi-step process, says Martha Holler, spokeswoman for student loan provider Sallie Mae. Fortunately, loan providers often handle all or most of the steps as one transaction. Besides, under the new reading of the rules, students can start the process with a phone call, says Holler. It used to require written notification.
 Holler clarifies how it works: First, the student asks to repay the loan. Reason: It doesn't qualify for consolidation, unless the loan is in "repayment" status. After that, the student asks for a deferment until graduation, which is automatically extended if the student is in school more than halftime. Then, the student applies for consolidation. Last, she signs a promissory note to repay the loan starting immediately after graduation, she says.
Just how late students can submit applications for consolidation depends a lot on the lender and the complexity of their applications. Some lenders, such Sallie Mae, have Web sites that allow students to complete and submit applications online.
|
|
