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Consolidating your student loans

Considering consolidating your Federal Family Education Loan Program (FFELP) student loans in order to lock in the new, lower rates?

Here is what you need to know:

KEY TIME PERIODS:

• Borrowers who graduated in 2012, and choose to consolidate during their six-month grace period, can lock in a 1.79 percent rate on their variable rate federal loans.
• Other qualifying borrowers with unconsolidated federal Stafford loans originated prior to July 1, 2006 can consolidate their variable rate loans at a locked-in rate of 2.50 percent.

BEFORE CONSOLIDATING, CONSIDER THE FOLLOWING:

• It may be more financially prudent to retain the original borrower benefits on your unconsolidated loans. Consider consolidating just the variable rate loans in order to lock in the current rates on a long-term basis. You do not have to consolidate all of your loans.
• If you consolidate some of your loans and not the others, you may have to make payments to two lenders. The Direct Loan Program provided by the U.S. Department of Education is the only source to obtain a consolidation loan. Make sure the dollar amount to be consolidated is worth switching from your current servicer, or having more than one servicer.
• If you can afford your current payment, consolidating your student loans over a longer term will cost more in interest throughout the life of the loan. If you are interested in a longer term, however, and have $30,000 or more of indebtedness in federal loans, ask your current servicer about extended payment plans. With consolidation and extended term loans, you have the ability to manage your overall interest costs by prepaying your student loans at any time without a prepayment penalty.
• Different payment options are available from your current servicer to help you manage your loan obligation without having to consolidate. SAF has numerous repayment plans to allow you to reduce your loan payment to an affordable amount and extend the term of your loan. Deferments and forbearances can also help you manage expenses when needed. Just ask one of our loan counselors to see how we can help.

Nonprofit servicers, like SAF, give back to students in the form of grants, scholarships and public outreach efforts.

For more information about your options, contact SAF at (800) 852-2761