Should I wait to consolidate? | 03.17.10
A question we receive often in our financial aid forum and through email is whether or not a student can consolidate their loans multiple times. The answer is rather simple: no if you are not taking out more, and yes if you are.
Once you have consolidated a set of loans, the originals are paid off by your consolidation lender and you are locked into the new loan. The only time you can reconsolidate an existing consolidated loan, is if you take out more student loans for school to add to the pot.
Based on that information, the next frequent question is, “should I wait to consolidate, then?” Honestly, I would say yes. Unless you truly cannot afford the monthly payments and they are threatening to drive you into bankruptcy, homelessness, or unhealthy financial actions, consolidation will cost you more in the long run.
Also, if you are still in school, I would recommending holding off on consolidating your loans until you are absolutely sure you won’t be able to afford the monthly payments. The standard grace period is valuable because it gives you six months to find a job and get some savings put away before you need to make payments on your loans. If you are four months in and dubious about your chances of finding a good job, then it might be a good idea to think about loan consolidation.
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I have a question that I hope somoeone might be able to answer. I took out all my loans prior to 2006 and consolidated right away when I graduated in 2006 at about 5%. I’ve noticed that consolidation rates for loans prior to 2006 are now at less than 3%. I also know that if I take out new loans (I would take some new classes) I can consolidate the new loans with the old ones that I've already consolidated. If I do that, will I get the less than 3% rate on the pre 2006 loans that I am paying 5% on now, or will I be paying the current consolidation rate on all of my loans, which are over 6%? Thanks in advance.
@Dan – You definitely can consolidate your new loans with your previous ones, as long as they are the same type (federal vs. private). For the interest rate, if you are consolidating federal loans, it is a weighted average. For private loan consolidation, it is based on your credit and whatever formula the company uses.
Good post. I have a question that you might be able to answer. I took out all my loans prior to 2006 and consolidated right away when I graduated in 2006 at about 5%. I’ve noticed that consolidation rates for loans prior to 2006 are now at less than 3%. I also know that if I take out new loans (I would take some new classes) I can consolidate the new loans with the old ones. If I do that, will I get the <3% rate on the pre 2006 loans that I am paying 5% on now, or will I b paying the current consolidation rate on all of my loans, which are over 6%? Thanks in advance.