SNEAK PREVIEW: Student Loan Rates to Drop

I consolidated my student loans several years ago with a company called Great Lakes and a few years ago the loans were taken over by a company called Xpress Loan Servicing. Up until a couple weeks ago, I was very happy with them, but I've run into some trouble and can't get a straight answer. I have 3 loans, 2 subsidized and 1 unsubsidized. For the past year or 2, I've been paying LOTS extra on the unsubsidized, as it has a higher interest rate, with the intention to pay that one off and then focus on the other 2. I always pay the minimum on the other 2 as well. A couple weeks ago all of the sudden the principal balances on my loans changed, while the overall number stayed about the same as it should have been. I emailed the company immediately and that's where the trouble started. First I was called a liar and told that the principal balances had not changed. Upon contesting that, I was then told that back in October 2008 I was delinquent on one of the subsidized loans and that they were then forced to redistribute all of my payments from then on, of course to their advantage. I told them that I didn't think that was accurate, and could they please provide me with the information of my so called delinquency. I was told that they were only now just noticing this because of a delay in their system and that they couldn't tell me what I had done wrong because they had at that point already reapplied the payments and no longer had that info. I explained that that was ridiculous, and that they shouldn't be able to penalize me for something they can't actually explain to me that I've done. And then finally, the story changed once more and after contesting the delinquency story, they now say that I wasn't delinquent but it was for "guarantor reasoning." Unfortunately I don't know what that means and given their track record do not trust this information either. I work/live on a cruise ship and am not in the States during the week, so calling them is very difficult, and the one time I did call cost me a small fortune. Their emails have been very unhelpful and they have yet to actually have helped me. I've been searching the web to try and figure some of this out, but haven't been able to yet. I would like nothing more than to get my loans out of their hands, as I do not feel safe with them, but as far as I can tell I cannot consolidate loans again. Is there any way to move my loans to another company or do I have any other sort of recourse? I apologize for the length of this entry, and realize that this is not completely what this article is about, but any sort of advice/information would be greatly appreciated. Thank you for taking the time to read this.

SAVAGE SAYS: Wow, that's quite a story. I'm going to send you to the website for loan consolidation at the U.S. Government Department of Education. I'm not doing this to pass you off, but you should use the contact section to report this situation. If you don't get an answer, get back to me and I'll try to contact the company for you, see what's going on!
First try this: http://www.loanconsolidation.ed.gov/

Terry,

I have consolidated my loans a couple of years ago at 6.5%. Is there anything I can do to have that % lowered? Can I refinance the student loans with someone else at a much lower rate?

Thank you,

SAVAGE SAYS: Unfortunately, the rules say that you can only consolidate Federal student loans one time. The best thing you can do -- if you have no other debt -- is to pay down those loans as fast as possible, thus incurring less interest. If you have a home, you might be able to refi to a lower fixed rate loan (assuming you have equity in the home and good credit), and use that money to repay the student loans.

How can current college students and parents with PLUS loans get lower rates when they won't allow us to consolidate until our son graduates? Any advice would be appreciated as his student loans are running at around 8% interest. We do not have a home to borrow against. Thank You.
SAVAGE SAYS: This is just another disaster in the making. Student loans have become a total ripoff -- and a huge burden. You are supposed to be allowed to consolidate, and the consolidation rates, which are based on t-bill rates, will be at their lowest ever starting July 1st -- But no banks are making consolidation loans!
(check www.simpletuition.com under "consolidation" to verify). I don't have an answer for you, other than to hope that the new TALF program will free up money for consolidation loans.

Hi Terry,
I have a summer home with a $158,000 mortgage at 5,875% and my primary home has about $80,000 at 7%interest. Should I keep these two amounts seperate or should I combine them and refinance?
My wife and I are both working and have no credit card debt. She is 59 and I am 65.
Thanks,
SAVAGE SAYS: Keep them separate, keep paying, and try to pay extra principal on your primary home every month.

i have 7.25 rate loan.how can i lower it?i have cosolidated about two years ago.can i recosilidate and where?
Savage Says: It's called "consolidation" -- and you can only do it once! (I'm assuming you're talking about Federal Student loans.) If it's another type of loan, please describe.

I graduated June 2006 and have consolidated my loan twice. Can I consolidate at a lower rate again?
SAVAGE SAYS: I'm not sure how you consolidated your loan twice! You can only consolidate the same loan one time - -unless you go through a very complicated process. Did you consolidate two loans?
If you have unconsolidated loans, you'll want to wait until next July 1st, assuming rates stay this low. That will give you an unprecedented lowconsolidation rate. We'll know in early June what that rate will be, and I will surely be writing about it.
And back to your original question: for a more detailed answer to to www.SimpleTuition.com and ask the experts there.

I live in India. My daughter is excellent in her studies. She wants to become an astronaut. I want her to get quality higher education. But annual income is between $60,000 + per anum. I am seeking for a financial institution to support her further studies. Any suggestions ?

SAVAGE SAYS: I suggest she apply to various universities,and explain that she will need financial aid. Parents of American students must fill out a form detailing their income and assets. It's called FAFSA. I'm franky not sure if that applies to foreign students seeking aid, so I would suggest you go to this website, designed especially for foreign studens: http://www.edupass.org/

In 1979, when I was beginning college, the prime interest rate was 11.5 percent and student loans were at 3.4 percent — or 70 percent below prime. Now, the prime rate is 5.25 percent yet student loans are 8.5 percent (and adjustable) — or 57 percent above prime. What is going on?

SAVAGE SAYS: My point exactly! Student loans are no longer a good deal -- and the entire concept of going into debt for a college degree is one that should be debated in the big picture sense -- not just the available loans or rates! When families rebel, or choose lower cost schools, then the market forces will impact colleges to lower rates, cut cots. Of course, and unfortunately, that will come much too late for the kids that are currently grappling with the staggering cost of college NOW! All I can say is: plan wisely and borrow carefully!

Like the previous poster, I am overwhelmed with multiple bills from multiple lenders for multiple loans for 3 college students. We have Staffords (sub and unsub), several Plus loans and one consolidated--and 4 more student-years on the way! Most are fixed rate, and I too would like to simplify my life. But when? Since most of my rates are fixed, and the consolidation is just a weighted average of existing rates, is there any reason to wait? Can I consolidate now, and then consolidate again later, to include new loans PLUS the consolidation loan I already have? With many consolidators (Sallie Mae and All Student Loan, to mention a couple) not offering consolidations currently, does that signify that it would be best to wait, or go with the best offer I can get from consolidators still open for business? Are there significant differences between consolidators if they all use the same calculation to determine the rate? Thanks, Pat

SAVAGE SAYS: First, I apologize to you, as well as to several others, for the delay in posting a response. I try to act immediately on all questions. But we just got new blog software --and my responses didn't make it to the web!

OK, about your question. I think you're a parent, right? And overhwelmed, right? Please read this week's column in the Sun-Times about student loans. You can find it easily at my website -- www.TerrySavage.com as well as a column written about 6 weeks ago on consolidating student loans.

First, it's time to get the responsibilities straight. You're responsible for your PLUS loans, and any private loans you co-signed. Your kids are responsible for their Stafford loans. It's an important distinction -- even though you intend to help.

As I wrote in the earlier column, few lenders are consolidating anymore, since the Federal government decided to give less "support" to those loans -- and because the big banks have other problems. Your best bet in consolidating would be to go the Federal government's direct loan consolidation program. Here's the website:
http://loanconsolidation.ed.gov/borrower/borrower.shtml

The "rules" and rates for loan consolidation are explained in that spring column. The rates on "floating rate" student loans dropped July 1st. Today's college juniors and seniors may still have floating rate loans, as well as some graduates. They can, and should, use their once-in-a-lifetime chance to consolidate at the current low rates. As noted, best deal is through the govt site listed above.

But for the last two years, Stafford loans have carried fixed rates and will do so for the life of the loan. There is no advantage to consolidating those loans -- except to see if you can get a small discount for online or prompt payments --and for the convenience of making just one payment.

Go to www.Simpletuition.com for more information, as well as the govt website. But it's time to have a family conference about what you can afford for the next kids in college. They may have to stay home for a year or two and attend a community college to give you a chance to catch your breath-- and your wallet!

Terry,
I make regular and timely payments to Sallie Mae but receive dozens of calls per month telling me I'm late.
I'd really like to refinance and get them out of my life.
Where can I turn for new financing and I'm thrilled to hear lower rates may be coming.

Thanks

SAVAGE SAYS: If you haven't consolidated your loans yet go to the Department of Educations's Direct Loan program. Here's the linlk: http://loanconsolidation.ed.gov/borrower/borrower.shtml