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Student Loans Now

Jaime Said:

Should I consolidate my student loans now although I plan to go to grad school next yr?

We Answered:

Student loan consolidation can be done for both the private and federal loans. The consolidation is a great tool for simplifying the monthly bills providing an immediate payment relief and the long term benefits. However, it is important to note, that the federal loans must be consolidated as one separate group and so must the private debts too. You cannot mixed them.

As to the federal loans, which you can consolidate only once, the interest rate will be fixed during the rest life of the loan. When you can do the consolidation during the grace period, it is the deal with the fortune, which interest rate you will get. You do not have to go through the credit check and there is no application fees

2. The Debt Refinancing.

If in your case you have just graduated and got the work, your credit score may have improved compared your student times. Now when you will do the consolidation, you will refinance the interest rate and the repayment time. This process is the most effective thinking the cost savings.

3. Consolidate During The Grace Period, You Can Reduce The Interest Rate By 0,6 %…
When you consolidate during the grace period, within 6 months after the graduation, you can save in the interest rates by 0.6 %. During the times, when the interest rates are historically on a low level, just by renegotiating the interest rate can bring the much needed help.

4. How Much Are The Savings?

The ideal situation would be the one, when the interest rates are historically low. Then by consolidating and refinancing the whole debt package, you can get the maximum saving. To take examples, if your student loan is $ 10.000 and you extend the repayment time from 15 years to 25 years, you can save over $ 230 a year. With the $ 100.000 debt the saving is over $ 2.400 a year without the interest rate changes.

5. Start To Calculate The Benefits From The Present Loans Consolidation.

When you think the student loan consolidation rates, you have to take into account two things: your present loan terms consolidation rate and the future rates after your student loan possible refinancing. It can happen, that only the new interest rate brings the saving you need and there is no need to extend the repayment time.

However, remember that you can consolidate the debts only once. This means, that it may be wise to plan your monthly payments so, that your monthly expenses will be on the lowest possible level. This is a careful plan and will help you, if you will meet sudden changes with the incomes or living costs.

Tina Said:

Should I invest in my 401k now or pay off my student loans now?

We Answered:

Good question.

This is really a personal decision of how well can you manage your debt. If all you have is school loans for debt, and the rates are 3%-4% fixed, I would actually take the pre-tax contribution benefit to the 401(k) to reduce my taxable income.

If the employer has a match program, I'd prob max that out first.

If you are even in the low 15% tax bracket, it is prob still a modest tax savings verses the low interest you are paying.

This assumes that you are also able to pay substantial payments to the student loans. If you think it will take you 7-10 years to pay those off, then I would pay the loans off first. If you can pay off the loans off in 2-3 years, then I'd make my 401(k) contribution.

You may want to seek advice from a tax advisor regarding tax matters. I am not a tax expert.

Carrie Said:

Should I pay off my student loans now?

We Answered:

The amount you would get back on your taxes for deducting the interest is less than the interest you are paying. In essence, you are borrowing money at a higher interest rate to invest it for a lower rate of return.

Additionally, student loans can not be discharged in bankruptcy. You are in a good strong financial position now. Go ahead and pay the loan off and build your savings back up. That way, heaven forbid, your situation changes, this is one debt you don't have to worry about.

Pay the loan off.

Lauren Said:

I have money in the stock market but some student loans - should I pay off my student loans now?

We Answered:

The deferral date is irrelevant. And thinking in terms of offsetting your 8.9% interest rate makes limited sense.

What you're doing is treating $7,000 you don't own as though it's your own collateral to finance a high risk stock market capitalization. That is very uncool and unsmart.

You're trading $7K sure debt for money in a very high risk environment.

Try it this way as I'm really hoping to show you a few views so you can make the best choice for yourself:

You have about two thirds of your ed debt in ready cash that could pay off most of the outstanding loan. You are not only risking immediate payback of much of it in the shaky stock market, you could lose your cushion yet still owe the $7K.

That's a zero sum game---unless you can guarantee risk-free earnings in excess of the 8.9% interest.

I do this for a living and notwithstanding, I've been liquidating market investments because I see a market swoon in mid-January and continuing well past Feb. Not meant as a boast but I've been right in calling corrections a number of times. I usually underestimate the severity of the correction. This time I'm not taking chances and have reduced margin (borrowed $) exposure over th past year from $230K down to $13K and still reducing nearly daily.

It's a good idea to be very conservative when things are so unsettled. And they are!

Sherry Said:

Is anyone consolidating student loans now?

We Answered:

If your credit is still decent, i think you should be able to consolidate at least some of those loans. Check out the website below for more information.

Sherri Said:

Where do I apply for student loans now that the government has cut out the "middle man"?

We Answered:


Very little has changed in the process - government loans are still the same, and all of the limits are still there. Private loans are still the same too - they're a completely different type of loan, and they haven't been eliminated or changed at all.

The only practical difference for you will be that your school will be able to refer you directly to a link that you'll use to complete your Master Promissory Note (your loan agreement), rather than having to instruct you to choose your own lender.

You apply for a Stafford loan the same way as always - by completing a Free Application for Federal Student Aid. The information that you provide on the form will determine if you are classified as a dependent student for financial aid purposes, or as an independent student. Don't make the common mistake of assuming that you're "independent" if you are "on your own", or paying your own way. That's the everyday definition of independent, but that's not the way that the financial aid system uses that term. You are independent for financial aid purposes if you over 24, or married, or providing most of the support for children, etc. You're not independent because you have a job, or because you pay your own taxes, or because your parents don't claim you as a tax dependent or help you pay for school.

You will eligible to borrow a maximum of $5500-7500 a year as a dependent (depending on your year in school), and between $9500 and $12,500 as an independent. Nothing has changed about those limits.

If you need more than that, there are a handful of lenders who make private educational loans, but it is VERY difficult to be approved for those loans without a cosigner. Those loans are on top of your government borrowing. And again - nothing about the new streamlined government lending system has any impact on those loans or the lenders who make them.

The only difference for you is that you won't have to choose who to borrow your federal loan from - it will automatically be the US Department of Education.

Good luck to you!

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