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[divingmusician]

Thanks so much for all the advice!

[ideagirl]

I owe: 50,000 with a 3% fixed interest rate, 25,000 with a 6.8% fixed interest rate, and 5,000 with a variable (currently 1.88%) interest rate.  According the online calculator, in order to consolidate I'd need them to take a weighted average of my interest rates which would result in a 4.25% rate for the new loan.  Because this rate is higher than interest rate on the largest amount of money I owe, I'm wondering if it is worth consolidating and hoping the IBR works for me?

Probably not, no. Stick with what you've got until/unless you get a job that would qualify you for the IBR. You can go online and play with mortgage calculators (they work for any interest-bearing loan) if you want to see just how much money it saves you to have such low interest on the big loans.

[fizmath]

It looks like you have to pay for 10 years after 2007 to qualify for the public service loan forgiveness option.

http://www.finaid.org/loans/publicservice.phtml

[arty_]

As an aside, I do not recommend that you default on your loans. I did (had no job, ignored the letters for a year), and the penalties I got hit with were (are) incredible.

[divingmusician]

Update: after crunching all the numbers, I've decided that at this time I don't need to do anything with my loans.  They are in unemployed deferment and until I get work, I don't need to do anything.  Once I get work, if the income is low enough (I hope not!) for me to qualify for the IBR then I'll seriously consider consolidation.  My hope is that once I get work I can pay off my loans at 6.8% in a few years by pre-paying while making the minimum payment on the lower interest rate loans, then I will have only the lower interest rate loans left.  Consolidating now, when I don't know what my income may be, limits the option of paying down the higher interest rates first in the future.  So I wait.  I know my options when the job comes and will proceed with consolidation/IBR or pre-paying depending on my income.

Thanks everyone!

[glowdart]

Update: after crunching all the numbers, I've decided that at this time I don't need to do anything with my loans.  They are in unemployed deferment and until I get work, I don't need to do anything.  Once I get work, if the income is low enough (I hope not!) for me to qualify for the IBR then I'll seriously consider consolidation.  My hope is that once I get work I can pay off my loans at 6.8% in a few years by pre-paying while making the minimum payment on the lower interest rate loans, then I will have only the lower interest rate loans left.  Consolidating now, when I don't know what my income may be, limits the option of paying down the higher interest rates first in the future.  So I wait.  I know my options when the job comes and will proceed with consolidation/IBR or pre-paying depending on my income.

Thanks everyone!

You might be surprised how high "low enough" is for the IBR plan. 

Good luck with everything!

[chemxtree]

i'm glad this thread was picked up similar the earlier one on the loan forgiveness program.

im coming out of a year long financial hardship deferment with my wife being out of work... she recently found something but it still leaves us in a red position if we have to pay on my school loans + her school loans totalling a little under $1000/mo! I talked to my loan servicer and they pointed me to the IBR program... i just completed my taxes for 2009 so i have appropriate Adjusted Gross Income numbers and putting it in with my loan totals, avg. interest rate, and family size, i see an payment thats nearly half what i would normally pay for a standard 10yr plan. CHEER!!!

On top of this i work for a govt research lab that's officially a 503(c) and hope to be here for a few more years before trying to land a TT-faculty position. With the loan forgiveness thing it sounds like as long as i can make my payments without break now that i start AND stay at my current job or transition into non-profit uni or state college than i'll be debt free in 10yrs??? Wow!

[gradstudentanon]

On a related note, can you consolidate Federal loans you borrowed through Sallie Mae under the Fed Direct Loan program? Sallie Mae says they no longer offer consolidation but I'm unclear if that means they themselves will not do it or they won't allow me to consolidate through the Feds. I have some other loans already with the Feds  and think it may be easier on me in the first few years as I enter repayment to have everything consolidated. Also, I'd rather deal with the Feds going forward than Sallie Mae.

[divingmusician]

Yes, Sallie Mae won't consolidate any more, but you can take all your Sallie Mae loans and consolidate them through the fed (http://www.loanconsolidation.ed.gov/).  However, if you have different interest rates on the loans you wish to consolidate an average will be taken to create the interest rate on your new consolidated loan.

[gradstudentanon]

Thanks, Divingmusician. I was aware of the interest rate issue. The majority of my loans are at 6.8%; if I ran the online calculator right, consolidation will lower the interest rate on them.

[jonesey]

Yes, Sallie Mae won't consolidate any more, but you can take all your Sallie Mae loans and consolidate them through the fed (http://www.loanconsolidation.ed.gov/).  However, if you have different interest rates on the loans you wish to consolidate an average will be taken to create the interest rate on your new consolidated loan.

Not quite; your consolodated interest loan will be whatever the interest rate of your greatest money owed is currently.

IOW, if you have $50K on a loan with a 5.4% average, and another $10K on a loan with a 7.8% APR, you'll consolodate, through the Federal government, with the entire amount under the 5.4% APR. 

[divingmusician]

IOW, if you have $50K on a loan with a 5.4% average, and another $10K on a loan with a 7.8% APR, you'll consolodate, through the Federal government, with the entire amount under the 5.4% APR. 

WHERE did you get this to happen??  They wouldn't let mine work that way.  It was an average of all loan amounts, not the largest sum....that would be great.  So tell me where you went because the Fed loan consolidation website doesn't do it that way (mine was 50K at 3.4%, 20K at 6.8%, 10K at 1.7% and I was given a rate of 4.6% for the new loan).   So where is this magical place you speak of that will give all my loans, consolidated, and interest rate of 3.4%?  That would be AMAZING!!!!!!

[jonesey]

IOW, if you have $50K on a loan with a 5.4% average, and another $10K on a loan with a 7.8% APR, you'll consolodate, through the Federal government, with the entire amount under the 5.4% APR. 

WHERE did you get this to happen??  They wouldn't let mine work that way.  It was an average of all loan amounts, not the largest sum....that would be great.  So tell me where you went because the Fed loan consolidation website doesn't do it that way (mine was 50K at 3.4%, 20K at 6.8%, 10K at 1.7% and I was given a rate of 4.6% for the new loan).   So where is this magical place you speak of that will give all my loans, consolidated, and interest rate of 3.4%?  That would be AMAZING!!!!!!

Sorry, that's what I was told by my current lender when I asked about consolidating (I.E. they don't do that anymore, the feds do, and I was worried about having my loans consolidated under whatever the current rate is and they told me what I told you, above.  Evidently, the Feds are saying something else...

[glowdart]

IOW, if you have $50K on a loan with a 5.4% average, and another $10K on a loan with a 7.8% APR, you'll consolodate, through the Federal government, with the entire amount under the 5.4% APR. 

WHERE did you get this to happen??  They wouldn't let mine work that way.  It was an average of all loan amounts, not the largest sum....that would be great.  So tell me where you went because the Fed loan consolidation website doesn't do it that way (mine was 50K at 3.4%, 20K at 6.8%, 10K at 1.7% and I was given a rate of 4.6% for the new loan).   So where is this magical place you speak of that will give all my loans, consolidated, and interest rate of 3.4%?  That would be AMAZING!!!!!!

Sorry, that's what I was told by my current lender when I asked about consolidating (I.E. they don't do that anymore, the feds do, and I was worried about having my loans consolidated under whatever the current rate is and they told me what I told you, above.  Evidently, the Feds are saying something else...

My consolidation loan with the feds was an average of interest rates, as well, but that was before they began many of the newer programs.  (It was back when my loans had variable rates around the 3 % mark, though). 

[tanit]

marking this one