Student Loan Information

Which student loan consolidation plan would be better?

I’m applying without a co-signer and wish to lower my monthly payments (I’m paying about 5 banks right now, every month.)

I wouldn’t use a bank, personally–I would consolidate with a student loan company. That way, your loans are still STUDENT loans, which (not to be morbid) are forgiven if you die or under other circumstances, while a loan from a bank will have to be paid by your estate or (if you’re as broke as I am) by your loved ones. Also, student loans qualify for forbearance and that sort of thing, which a bank loan would not. They also tend to have much lower interest rates than a bank loan, because they are partially covered by the government.

I like Direct Loan, my husband likes AES. We both despise Sallie Mae–they are forever losing paperwork and charging fees that you do not owe, and their customer service is a joke. You just call up the company you choose (or visit their website–I filed my consolidation online), tell them you want to consolidate your student loans, and they’ll walk you through the process. Then, if you’re struggling financially, ask about an income-based forebearance–we both have our loans in forebearance while I’m staying at home with our new babies, and it was a really easy process. My consolidation did not need a cosigner, and in fact I don’t think the loan companies turn you down for a consolidation.

If you are determined to do the bank loan, which again I do not advise, I would suggest talking to a good accountant about what the difference will be over the life of the loan. I would be tempted to take the fixed rate loan, though, because it would stay the same no matter what happens with our shaky economy, but I don’t know enough about interest rates and current market trends to be sure that it’s the better route over the long term. Good Luck!!