Bank consolidating student loans
Bank consolidating student loans - catt sadler and sal dating
In addition, lenders will have to work harder this year to convince borrowers that they should consolidate their loans.In the past, consolidation let borrowers lock in interest rates for the life of their loans, avoiding future increases.
All loans issued after July 1, 2006, have a fixed rate of 6.8%, so consolidating no longer affects the interest rate those borrowers will pay. While there are still advantages to loan consolidation, recent investigations into some lenders' marketing tactics have pointed up the need for vigilance. George Miller, D-Calif., chairman of the House Education and Labor Committee, has asked the Federal Trade Commission to investigate "unfair and deceptive" marketing practices by lenders seeking to consolidate student loans.
And New York Attorney General Andrew Cuomo is investigating whether some college alumni groups received payments from Nelnet, a major loan consolidator, to steer students to Nelnet.
Reasons to consider loan consolidation: •You still have variable-rate loans.
Unless they've already consolidated, this year's graduating seniors will have a combination of variable-rate and fixed-rate loans, says Rob La Breche, president of consumer marketing for College Loan Corp.
Loan discounts that kick in when you start making payments are most valuable.
The longer you have to wait to qualify, the less a discount will be worth.
Here's a look at the relative value of common discounts, based on a loan with a 6.8% fixed rate.If you plan to graduate from college this spring, your mailbox may soon be filled with congratulatory cards from family friends, checks from distant relatives and reminders from your alma mater that your diploma will be rescinded unless you pay your overdue parking tickets.But if you borrowed to pay for college, much of your mail will come from lenders, urging you to consolidate your student loans. For years, loan consolidation has allowed borrowers to reduce their monthly payments and avoid interest-rate increases.But lenders will be even more aggressive this year than in the past, predicts Kevin Walker, CEO of Simple Tuition, a loan comparison website.In part, that's because a law enacted last year eliminated the decades-old "single-holder" rule.That rule required borrowers who had all their federal student loans with one lender and wanted to consolidate to use that lender. Smaller lenders are eager to lure student loans from the major players, Walker says.