Student loans
 

This has something to do with academics. Have any of you consolidated your student loans and locked in the rates?

I have a large amount of loans and I can pay it all off right now, but the interest rates are so low it's ridiculous. If I can lock in a rate between 3% and 4% I'll be very happy. I intentionally racked up loans because of that since I figured I can dump that amount of money into an investment that provides a higher return (an index fund returns on average 10%) and use the investment interest to pay off the debt interest.

Anyone else do this?

The only problem I spent about 10 hours calling up different companies and trying to research all the conditions and rates but then my loan holder is being a prick and not wanting to release it so I have to harass them. Anyone get them to let go of their loans before consolidating with another company that wasn't the majority holder of your loans?

-Rudey
--This is a confusing post I bet.

Rudey-

I consolodated all of mine (well all that could be consolodated) years ago and locked in a rate of 5% on close to 30K in loans. I chose Sallie Mae because at the time they had the best payment options. Mr. Amycat has his consolodated with Direct Lending, because a few months ago, they had the best deal. Do your research, but IMO, it boils down to these 2 being the best most of the time.

Now, with the ones that I could not consolodate, I pay the bare minimum on the sallie mae and have been throwing $$$ at the higher interest ones--they are now within 4 months of payoff. Then that same money will be thrown at sallie mae--and will be paid off in 4 years instead of 25.

I just want to say I have very little chance of ever naming any of my kids SALLIE MAE!! I hate her. :p

I consolidated all of my loans this year through the College Loan Corp. I locked in my interest rate at less than 3% (can't remember the exact number.

Seriously? I'm impressed. All the companies I found were giving me a quote of 4.125% and then reduction incentives if i paid on time for a certain amount of payments and if i linked the payments to a direct deposit account. I think with all that it would get just somewhere in the 3% range.

I also heard you can deduct your interest from your taxes. I'll ask a friend about this but if i can have that money with no interest pretty much because i get it back through tax deductions then it's great - it's free money to invest in the market or to buy a home. Am I reaching here? This sounds too good to be true. Maybe i should just be satisfied with getting a fixed low rate.

-Rudey

We were just looking into this last night.

We haven't consolidated loans yet, but I DID find out that rates go up in July, so you have time to shop around.

And yes, the interest you pay on the loans is tax deductible.

Interest on loans is tax deductible OVER a certain $$ amt of interest. I am not sure what that figure is, but I've never been able to deduct the interest on my loans, and at one point they were over $40K

Ha ha, I had a client that was an accountant and she had 2 dogs, one was named Sallie Mae and the other was Fannie Mae.

I consolidated my school loans with Sallie Mae about 6 years ago-I had over 77,000$ in governtment loans. The rates were not to good back then, I ended up with 8.75% and it lowered this past year to 7.75% b/c I did the automatic debit pay. You can deduct some of the interest of theloans if you make a certain income. i unfortunately make too much $ to deduct the interest but I think if you make less than 65,000$ you can deduct the interest (but please check with your accountant on this figure).

One of my collegues who graduated a year and half ago got a rate of 3% from sallie mae-damn I was jealous! I f I could have gotten this rate i would definitely invest rather than want to pay them off.

I could pay off my loans now but I would rather continue to invest money. They had a segment on CNBC a few months ago, I can't remember who the financial advisor was but he recommended investing money every month rather than paying off loans quicker b/c in the end you will come out ahead. He also mentioned that some people people feel better if their loans are payed off sooner so if you fall into this category then paying them off sooner might be better (I have struggled with this b/c these damn student loans are like a monkey on my back :().

I am on the 30 year program but will hopefully pay them off alot sooner but for now would rather re-model my house and invest in the stock market while things remain low and "on sale".

Go back to school half-time for a short amount of time, take out as small a loan as possible, and try and consolidate again and see if your rate shoots down?

Amycat, do you have any idea what that rate you have to be above is?

kdonline I don't have time because I'm in my grace period right now and payments start in January. I guess I want to take care of that before then. And yeah interest rates will definitely go up the next time the fed meets.

-Rudey

can i hire one of you to take care of my financials and loans when i graduate? i just read this thread and i felt like i was reading chinese. i have no idea what any of you are saying :(

lol listen you're able to get loans at a variable rate right now which means the interest rate can change. Now consolidation creates one loan from all of your little loans and creates one fixed rate that can't change.

So if you know you'll need money later, which you will probably for a home, max out your loans if they are at a nice low rate because when you consolidate you can stay around that low rate. Then with that money invest it in something that pays you more than what you lose ya dig?

-Rudey

Actually you can deduct your interest...
 

There is no set amount of loans that you have to have in order to be able to decuct the interest paid into a student loan. Regardless of whether you have 5K in loans or $50,000. HOWEVER, there are income limits for using this deduction. I beleive you can't make more than $65K a year and claim the deduction.

I just consolidated through Collegiate Funding Services and they were great!! They consolidated my federal loans AND my private loans and now I make one easy payment that they take right out of my checking account!

The person I talked to there was SUPER patient and very helpful. He was really great about explaining everything and helping me to get all of the information that we needed.

Good luck!
Allison

If you are married and make over 100K combined you also cannot write off interest for student loans. I thought it was 50K for single, but maybe it went up. Maybe I should look into if it went up for married people too. We've only been able to write off student loan interest 1 year because of this rule.

Re: Actually you can deduct your interest...
 

So I follow the law, I myself am a good investment for student loans since I will be productive as opposed to most schmos at podunk u, I'm able to generate capital to bring returns to cover my debt, and I'm able to use my debt as a form of investment similar to a home but that is considered fraud? I hate to tell you but you're wrong...don't piss on my parade baby.

-Rudey
--I'm in the money...I'm in the money...doo doo da doo doo.

I love Sallie Mae. I locked in an interest rate of 2.87% for my student loans when I consolidated and they have a cash back deal if you make a certain number of payments on time.

Re: Actually you can deduct your interest...
 

Oh, right, because if there's all those really needy people out there, all us UMC class kids at Marquette wouldn't be getting our nice little UNSUBSIDIZED loans. :rolleyes: And isn't everybody taking a loan out to make an investment? AND furthermore, why would the gov't allow every student to take out a certain amount in loans regardless of family income if it was really such a problem.

Also, did anybody else pay the interest on their loans when they were in school? Since I have unsubsidized ones, and I'm sure I'm not the only GCer in this boat, I've been paying off the interest on them each year. It's only ~$15 a year for me and it's going to save me sooo much money later.

Re: Re: Actually you can deduct your interest...
 

Well, yes it is completely legal, BUT some loans like the loan/conditional grant for teachers allow so many people to take the money. So in essence, if someone who didn't need the money went ahead and took it, that could hinder others from receiving it as Discotish mentioned.

.if the original poster has already graduated, I agree that he has a right to do whatever he wants with his money, since he has already taken the loans out. The point I was trying to make was that it is wrong for someone to take financial aid in the first place if they don't need it. I'm sorry but I just don't see how racking up student loans and putting that loan money into investments is demonstrating financial need.

Student loans are to help students pay tuition, housing, etc...they are not all purpose loans for your own personal use for whatevery you want, just because of the low rates. You want to get a low interest loan for investments,a car, whatever...maintain a good credit rating and go to a bank. Don't freeload off the government and take loan money from people who really need it

Who is free loading? I've already demonstrated financial need and got the money. I could still be in school and do that as well if i did it honestly without lying on my tax forms. What i do with the money once i get it whether i'm in school or not then becomes a separate issue and i choose to be wise and pursue max gains on this. I don't have to spend all that money on housing, etc. If I choose to spend less then i'm entitled to less loans?

Investors have been doing this with other loans. Right now a lot of money manager took out large low interest loans to dump into the market in something called cash-and-carry. There is increased inter-bank borrowing becase the interest rate goes down which increases this intentionally. Arguably if a student can get their loan to pay for their education as well as whatever else and then invest it somehow to get it paid off easier, that's the best option. Heck if two poor people go to school, one gets 10K in loans, another gets 10K in loans and also works does that mean the second student who is the same financial condition as the first one is less deserving of a loan?

-Rudey

from clarkhoward.com:

Work for the feds and work off student loan debt! - November 3, 2003
Let’s say you have a lot of student loans and you want to get rid of them. The federal government is here to help. That’s right, the U.S. Congress has passed a bill that will forgive you your student loan debt up to $10,000 per year and $60,000 over your career if you will go to work with the federal government. When people take on a lot of student loan debt, they can’t consider jobs that don’t pay well because of the huge burden student loan debt places on them. So, to encourage people to consider a federal job, the government is offering to forgive most or all of your debt. Congress raised the maximum to $60,000 because different jobs will offer varying amounts of “forgiveness.” Federal agencies will compete for the best workers, and it hopefully will drive up the amount offered for all jobs. If you’ve thought about becoming a teacher, but you are concerned about paying off your student loan debt, the U.S. Department of Education has its own forgiveness program. There are eligible schools all around the country. And for every year you teach, a portion of your student loan debt is chipped away.
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then again, alot of these jobs require teachin in the ghetto, etc. I wonder if this applies to grad school loans.

How are we freeloading? I wish you would explain this. The government gives everybody a certain amount of unsubsidized loan money whether their daddy is Bill Gates or the guy who lives in my dumpster. If it's there for the taking, why can't we take it? So what if I used my first 10K of loans to pay off my car. I'm 20 and I own my own car. How many people can say that?

"When your school determined your federal financial aid award, it used a standard budget to estimate the expenses you would incur while attending school. This expense estimate is referred to as your cost of attendance (COA). If you can reduce your expenses to an amount less than the school's estimated COA, you might not need to borrow as much as the school has awarded" If you're so interested, take it up with your schools Financial Aid department. I'm sure they'd be happy to explain it to you....

What you are just failing to see is that you are taking money you don't need. Student loans are not low interest loans intended to finance your car loan.

I was trying to make a point and obviously, my opinion is in the definite minority. So I'll just leave this hot topic be...

I don't think anyone is fighting with you and you're entitled to your opinion. Regardless I see that loan as something you're entitled to while in college and since you're paying money back for the loans at a competitive rate above interest, a bank is still making money off of you. These aren't cash grants for being a poor student.

-Rudey

It is money I need, the school thought I "needed" it. How do you know what I do and do not need? I could have paid for my car over 15 years working at the mall, or paid that money towards my tuiton and used my student loan for the car payment and gotten it paid off quicker. If the federal govt was actually concerned about this, they wouldn't allow such enourmous refund checks to be issued to people.

If someone is awarded loan money for college to cover expenses and that person lives at the level below what their estimated needs are and they invest the money-- illegal??? NO. financially savvy?? YES.

And back to your questions Rudey....
I consolidated about $65,000 in student loans through Direct Loans. Direct Loans is part of the William D Ford Foundation which is associated with the Dept of Education. When I consolidated I locked my rate in at something around 4%. Like you mentioned, as I make on time payments the interest rate is lowered.
As far as your current lendor being an ass about giving up the loans--- they can tell you you what the want, but the fact is they can't hold onto your loans. The lendor doesn't want to give up the interest income your loans are generating.
We consolidated my husband's loans also and had huge problems with the lendor. I had the monthly payments set up to come out of my checking each month. I requested they stop the auto pay due to the pending consolidation, they told me they could deny the consolidation and would not stop the auto pay. The month the consolidation was due to go through, I put a stop pay on the auto pay. I received confirmation from Direct Loans that the other company had been paid. A week later the b*tch from the old company called about the stop pay. I told her the loan was paid in full by Direct Loans, she hung up on me.
When I started my husband's consolidation, I mentioned the problems with the current lendor. Direct Loans told me not to worry about it, they could get it through.

They have been a great company to work with. Good luck.
-wendi

Yeah I think I'm also going to be a prick and spend 10 minutes every day calling and asking to speak with someone until they get really pissed. They tried to tell me they'd let go of it only if I was delinquent in payments. I think only pricks work for these places.

-Rudey
--Prick is my word of the day

I recommend watching the Suze Orman show on CNBC, which is on several times every weekend. She always has someone call up about student loans...and about debt...and about all these "just starting out; how do I deal with" questions.

See... here's where I get confused. I can understand a student loan being funnelled into an investment once wo the government's knowledge... but at least where I am, we have to disclose all investments on our loan applications - and they deduct this money from our loan (aka, you use your own money, then the loan). Hell, you even have to disclose your car because they will assume that you are going to sell it to help pay for school.

If you're lying on your apps to get this money - that's a different issue....

Rudey,
Unfortunately once you consolidate that is it -you cannot consolidate again :(. (believe me i have tried) I actually e-mailed Suze Orman to see what she thought about getting a home equity loan to pay off the student loans-home equaity loans were at about 4% earlier this summer but alas, in Texas you can only take 80% of your home equity and use it as a loan and that only would pay for 1/3 of my loans.

I am not sure if Discotish was also referring to me investing. I have already graduated (almost 7 years ago) and believe me I am paying heavily for these loans, in fact the first 12 months 99.9% of my payments per month (600$) went towards the interest. In school I had no way of paying for my tuition so I had to take out student loans, now that I have graduated and am in my 30's I have to think about retirement so investing to me is a bit more important right now then paying these off so I pay the minimum each month. Maybe all of the prisoners who are getting a "free" college education should pay some of the needy students tuition-but I guess that is an entirely different topic.

I did use part of my student loans (about 2000$) for car payments but how else was I suppose to get to and from school? (and don't say use the bus b/c the bus doesn't run in College station after 10 pm and when you are in veterinary school you are in labs sometimes well after 10)

No one I knew wanted student loans but it was a fact of life, I am just glad I graduated a several years ago, the new graduates have over 100,000$ worth of debt-I can't imagine having this monkey on my back.

I was actually speaking to Direct Loans earlier this week as well as another consolidator (they call like everyday even though I have told them I already consolidated :rolleyes: ) and both said that doing back to school and taking out more loans will allow me to re-consolidate and take advantage of the lower rates. I'm like you and consolidated somewhere around 7-8%.

Did they say how much your new loan has to be in order to consolidate? My husband is finishing up his master's degree (without student loans) but has a HUMONGOUS loan waiting for him to pay on after graduation (already consolidated...long story :rolleyes: ). I've gone to a couple of websites and typed in his loan info and added a $2000 loan to "consolidate", but it doesn't reduce the payments any. (His old loan is at 8% locked in).

I don't want to consolidate him with my loans because that would mean if one of us dies the other would be responsible for the entire loan and as much as I love him, I would rather his loan die if he does .:cool:

No they didn't, but I would think that if you call their consolidation department and ask they could help. I know what you mean about consolidating with your Husband. I won't do it either for that reason. Also, because if one gets unemployed for whatever reason the other still has to pay the full amount.

Under NO circumstances should anyone ever consolidate student loans with your spouse--- the reason is exactly what you said above. Student loans are forgiveable upon death. There is no reason to pay for your dead spouse's student loans. The debt will not stay with your estate!!


-wendi

it was my understanding that you couldn't consolidate husband and wife student loans together, if thet are Stafford or Perkins loans. I agree with the above poster, in that the loans are forgiveable when you die, so it's best not to stick your partner with your loans if you were to die at an early age...

The believe the rules have changed on that-My DH & I just consolidated our respective Stafford loans, & we considered doing it together. We learned that now, H&W can consolidate together, and if one spouse dies, their portion of the consolidated loan is forgiven. I'll have to go back and find that flier & see if I can get a web-site that corroborates...

The downside, though, is that if one of you needs a deferral-say if you lose your job, or something, both spouses have to be eligible for the deferral. So, it may not be a good idea to consolidate together, even though the death-thing has been addressed.

ETA: I was bothered by the fact that I couldn't find this on-line anywhere, so I called my loan counselor (at Panhandle Plains Student Loan Center) and she told me the rule has changed in the last 3 months or so.... It only applies to death of a spouse though-so if you divorce, both spouses remain jointly/severally liable on the entire amount.... I didn't think to ask her if the rule change was retroactive, though.