student loan consolidation,any help would be great!!!
i keep getting paperwork for student loan consolidation (such as
HALO)...is this a "gimmick" or is it something i should consider
doing. right now i pay out roughly $450 a month (for 10 years) for my
student loan...
Stafford loans have a variable rate that is adjusted each sumer based on
a relationship to t-bills, with a cap of 8.25%. Current rates are 4.06%,
the lowest they have ever been. In the future that rate will change, up
or (not too likely) down, each summer.
Borrowers may choose to "consolidate", meaning that all Stafford loans
are brought together as one loan and the interest rate becomes fixed at
the current rate plus a small amount. Current consolidation rate is 4.13%.
On the likely assumption that rates will go back up over the life of
your loans, locking in a permanent low rate is beneficial.
But, most lenders automatically consolidate Stafford's into a long-term
loan unless you request otherwise and the extra years of interest will
offset your savings - request a shorter term, or if they can't do that
then simply pay an additional amount each month to still wipe it out at
the end of the current ten year term - there should be no penalty for
prepayment.
You don't need to change lenders - your current lender probably offers a
consolidation program. But check out the competitors - some offer
promotional bonuses.