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Smart to Consolidate Student Loans

johnr22 8 12 August 13, 2015 at 02:23 PM in Finance
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Last Edited by johnr22 August 13, 2015 at 02:36 PM
Here's the deal, I have two separate student loans

Federal: $20k at 6.55% (fixed)
Private: $45k at 5% (variable)

Any advice on consolidating these two loans, is it worth it and will it save me money in the end? I am currently paying more on my federal loan and the minimum payment on my private. Any advice would be helpful. Thanks

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#2
these are now biggest student loan lenders




https://www.citizensbank.com/stud...-loan.aspx
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#3
You got some really good rates. I would just stay with it if I were in your shoes. $65k is nothing. The Dentist I work with has over $300k in student loans. He has to pay over $1,000/month just bare minimum.

If you do decide to consolidate with some company like Sofi, look at what they actually charge per month as a minimum. I did, and I realize they lie.

I'm currently paying anywhere between 13% and 22% apr for all my credit cards. Sofi says they can consolidate my loans into 1 payment for $700 some odd dollars. It turns out I only pay about $658/month as a bare minimum for all my credit cards. And Sofi says they are offering me 8% interest rate. How could they be offering me 8% when I'm paying over 13% now and what I'm paying now is cheaper than what Sofi is offering?

Something is wrong with their numbers. They say they are offering me 8% interest rate, but it's actually worse than my credit cards. Don't fall for this scam. Look at the numbers hard and look for any additional fees. Many places will charge a fee like 3% of the total loan amount or something to hedge their position.
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#4
Quote from Ayahuasca View Post :
You got some really good rates. I would just stay with it if I were in your shoes. $65k is nothing. The Dentist I work with has over $300k in student loans. He has to pay over $1,000/month just bare minimum.

If you do decide to consolidate with some company like Sofi, look at what they actually charge per month as a minimum. I did, and I realize they lie.

I'm currently paying anywhere between 13% and 22% apr for all my credit cards. Sofi says they can consolidate my loans into 1 payment for $700 some odd dollars. It turns out I only pay about $658/month as a bare minimum for all my credit cards. And Sofi says they are offering me 8% interest rate. How could they be offering me 8% when I'm paying over 13% now and what I'm paying now is cheaper than what Sofi is offering?

Something is wrong with their numbers. They say they are offering me 8% interest rate, but it's actually worse than my credit cards. Don't fall for this scam. Look at the numbers hard and look for any additional fees. Many places will charge a fee like 3% of the total loan amount or something to hedge their position.
Interesting. I was looking into SoFi yesterday. I believe my minimum payment would be around $1200 to get a fixed rate around 5%. I think I could do that but I would need to cut spending in a lot of other places. However, if they do have a 3% total loan fee then that completely ruins any savings. Thanks for the response, I will look into it much more closely now before making a decision.
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#5
Quote from Ayahuasca View Post :
You got some really good rates. I would just stay with it if I were in your shoes. $65k is nothing. The Dentist I work with has over $300k in student loans. He has to pay over $1,000/month just bare minimum.

If you do decide to consolidate with some company like Sofi, look at what they actually charge per month as a minimum. I did, and I realize they lie.

I'm currently paying anywhere between 13% and 22% apr for all my credit cards. Sofi says they can consolidate my loans into 1 payment for $700 some odd dollars. It turns out I only pay about $658/month as a bare minimum for all my credit cards. And Sofi says they are offering me 8% interest rate. How could they be offering me 8% when I'm paying over 13% now and what I'm paying now is cheaper than what Sofi is offering?

Something is wrong with their numbers. They say they are offering me 8% interest rate, but it's actually worse than my credit cards. Don't fall for this scam. Look at the numbers hard and look for any additional fees. Many places will charge a fee like 3% of the total loan amount or something to hedge their position.
Have you looked at the term? I did a SL refi calc with SOFI and was amazed at their interest savings value - that's how they give you the numbers, interest saved over the life of the loan. I thought - great, that's like $2k in interest I save - but then I realized they shortened the term by about half which OF COURSE is going to save interest. Re-running the numbers, I can isolate the effect of the rate change to about $60 of interest savings, meaning I can just increase my current payments and essentially save all that $$ without the hassle of refi.
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#6
If you are struggling to keep up with your payments, however, then consolidation could be a help — but do your research before committing. First make sure that consolidating will actually save you money. Next, beware of fraudulent lenders. Your new interest rate will be a weighted average of your existing rates, rounded to the nearest one-eighth of a percentage. In other words, it's going to be higher than your lowest interest rate and lower than your highest.
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#7
there are many variables rates terms other options do you plan to buy a house soon how much are your payments and how much can you pay.
see here for option
http://www.magnifymoney.com/blog/...1091646352
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Last edited by komondor August 15, 2015 at 02:26 PM
#8
Quote from Ayahuasca View Post :
If you do decide to consolidate with some company like Sofi, look at what they actually charge per month as a minimum. I did, and I realize they lie.

I'm currently paying anywhere between 13% and 22% apr for all my credit cards. Sofi says they can consolidate my loans into 1 payment for $700 some odd dollars. It turns out I only pay about $658/month as a bare minimum for all my credit cards. And Sofi says they are offering me 8% interest rate. How could they be offering me 8% when I'm paying over 13% now and what I'm paying now is cheaper than what Sofi is offering?

Something is wrong with their numbers. They say they are offering me 8% interest rate, but it's actually worse than my credit cards. Don't fall for this scam. Look at the numbers hard and look for any additional fees. Many places will charge a fee like 3% of the total loan amount or something to hedge their position.
Did you actually compare the breakdowns of the current $658 monthly payment vs the Sofi proposed $700+ monthly payment? Simply comparing the gross monthly amounts is comparing apples to oranges and pretty foolish, in all honesty. If Sofi is offering an 8% rate, a much higher percentage of your payment will be applied toward the principal, which will pay your balance significantly quicker than the $658 amount through the credit card companies and thus saving you a ton of money in the end.
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#9
Quote from Ayahuasca View Post :
You got some really good rates. I would just stay with it if I were in your shoes. $65k is nothing. The Dentist I work with has over $300k in student loans. He has to pay over $1,000/month just bare minimum.
I'm sorry if I don't have a whole lot of pity for people "drowning" in student debt who also have quite high earnings potential. Yes, doctors graduate with astronomical amounts of debt. But they also have astronomical earnings potential. All this talk of student loan forgiveness by politicians is a ridiculous pandering to those who have the greatest potential for paying it off. The people who actually need debt assistance are the dropouts who ended up being suckered by for-profit "colleges."

OP, remember that if you consolidate your Federal loans into private loans you lose the massive protections (like IBR, forgiveness, hardship, etc.) that Federal loans offer. If any of those are subsidized Stafford loans you'd also lose any benefits you have on those. Just me, but I would not re-consolidate those Federal loans unless you get a steep cut in the interest rate AND have a secure income stream with which to pay them off.
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#10
Hope these help! Smilie


·°·How To Find Specialty Student Loan Forgiveness Programs·°·
"" http://www.forbes.com/sites/robertfarrington/2015/05/06/how-to-find-specialty-student-loan-forgiveness-programs/ ""


·°·The Complete List of Student Loan Forgiveness Programs and Options·°·
"" https://studentloanhero.com/featured/the-complete-list-of-student-loan-forgiveness-programs/ ""


·°·This Chart Can Find Student Loan Forgiveness Programs In Your State·°·
"" http://lifehacker.com/this-chart-can-find-student-loan-forgiveness-programs-i-1702508838 ""


·°·THE TOP WAYS TO GET STUDENT LOAN FORGIVENESS·°·
"" http://thecollegeinvestor.com/578/ways-to-get-student-loan-forgiveness/ ""
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#11
I just helped my fiance consolidate some of her loans from nursing school. We went with Citizens Bank and we're going to be at 2.69% for a 15yr loan on about $75k. The rate is variable though.

The consolidated loans were 3 federal ones at 6.55% fixed and 1 private at 9%. So she is saving a ton with the consolidation. She/we will continue to pay the payment she was making before which, after the consolidation, means putting an additional $200 directly toward principal every month and will pay off the loan 5 years sooner (10yr instead of 15).

Maybe its because I had a 812 credit score to help her out, but Citizens Bank didn't even ask either of us for employment verification or tax statements or anything. The only documents we had to submit were the student loan statements. Overall it was a very painless process.
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#12
Use a calculator tool that is free online. Plug in current rates, your balance, etc. Then it will show you what you will pay over the term of the loan. Does that equal less or more than the consolidated offer? If it is less then you should consolidate.
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#13
Quote from baz5 View Post :
Use a calculator tool that is free online. Plug in current rates, your balance, etc. Then it will show you what you will pay over the term of the loan. Does that equal less or more than the consolidated offer? If it is less then you should consolidate.
I disagree. As I mentioned above, Federal loans have protections and guarantees which you lose when you refi and may be worth paying a higher rate for.

You cannot do an apples-to-apples comparison with Federal and private student loans.
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#14
I had very similar rates and decided to refinance mine at 3.8% variable
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#15
I'd say go for it and refinance. I did a few months ago with Citi. I have a good, stable job, as does my wife, so we don't need those silly protections offered in federal loans. Other than losing those protections, it's definitely worth it. There are no other costs associated with the refi. I saved several hundred dollars per month at a much lower rate. You can too!
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