Should I condsolidate my Student loans?

[dubfam]

I am in default on about 10 grand in student loans. I SAHM so I have no income that can be garnished, and I plan to SAHM for quite a while. I have an application to consolidate my student loans, and get out of default. I am being told that the government will defer payments until I have an income and that I will no longer be in default. This is all sounding too good to be true, and I am wondering what the catch is.

I am trying to get out of debt and clean up my credit so that DP and I can buy a house in a couple years.


Does anyone have experience with consolidating student loans? What should I look out for? What is the downside to doing this? HELP!!

TIA

[baileyandmikey]

I did, and it saved me a TON of money each month... go for it.

[milletpuff]

Who are you looking to consolidate them through?

When I looked, they could not be consolidated if they were in default. You would probably be eligible for a deferral or forbearance, which works like you are describing. In most cases, interest continues to accrue on the balance while they are deferred, so you end up paying a lot more in the long run.

Otherwise, what is the rate that they are at currently and what rate is the consolidation that is being offered?

[dubfam]

Hi,
Thanks for the replies!!

The consolidation would be done through the William D Ford Federal Loan Program. Windham Professionals is an agency trying to help me facilitate this. It is weird because they called me and I am not sure why they even have my info. I am very ignorant about this whole thing. I have only had contact with Windham Professionals, other than the application for the loan, which came from the loan program.

The lady I am working with at Windham is telling me that I wouldn't have to start making payments until I have employment. But how can that be? It seems like after a certain time period I would have to pay even if I wasn't working. I am also curious what is in it for Windham.

After reading the promissory note I am unclear as to what the interest would be. That is definitely something I need to figure out

Geez I am bad with $$ (but I am trying to get better )

[Belleweather]

Originally Posted by dubfam

Hi,
The consolidation would be done through the William D Ford Federal Loan Program. Windham Professionals is an agency trying to help me facilitate this. It is weird because they called me and I am not sure why they even have my info. I am very ignorant about this whole thing. I have only had contact with Windham Professionals, other than the application for the loan, which came from the loan program.

This? Sounds VERY fishy. Especially that you're working with a loan group. You can do your own consolidation with the government directly, online. You don't need to "go through" anyone at all.

I was also under the impression that loans that had been defaulted on couldn't be consolidated until they'd been rehabilitated and you had a history of at least a year of on-time payments.

[wdube]

I remember seeing a program one time (60 Minutes, maybe?), and it talked about people defaulting on student loans, and the interest still accuring. It sounded like this "debt" was following people for years.

I don't have any experience consolidating student loans, but I just wanted to put this information out there. Make sure you know exactly what you owe.

[milletpuff]

I just did a Google search for the company and some of the first few results that come up include the words SCAM, RIP-OFF, and HELP! You can do some more research if you want, but it doesn't sound very good to me.

How long has your loan been in default? Have you tried contacting the lenders and asking about forbearance or deferment?

Your loan interest rate should be listed on any bills that they sent you.

A lot of people are bad with money, and that's how companies like this (or what I'm guessing this company is like) make money -- they could on the fact that people are already so freaked out about money, and that they won't know enough to know what questions to ask. You're asking the right questions tho!!

[milletpuff]

Hey look! I just found the Direct Loans site for consolidation, and they say that you may be able to consolidate defaulted loans! Well, assuming one of your original loans was a direct loan (all my student loans were Stafford Loans that were direct)

http://www.loanconsolidation.ed.gov/...eligible.shtml

[dubfam]

Thanks for the help everyone!!

I just don't feel right about Windham, and it looks like there may be a very good reason for that. I think I should just apply directly with the loan agency.

[lisalulu]

I consolidated my government loans (direct loans) and you just do it directly with the goverment. Its pretty easy!

[Hazel]

my dh used chase to consolidate with and they have been super good to work with.