Don’t consolidate student loans… yet.
If you’re thinking of consolidating loans, don’t do it. First, because many lenders have dropped their consolidation programs. Iowa Student Loan used to have a program that would reduce your rate by a point if you made your first 12 payments on time…. Now they don’t even have a consolidation program.
According to an article in the Wall Street Journal,
Because of the Federal Reserve’s recent rate cuts, borrowers who haven’t already consolidated their variable-rate federal loans should wait until after July 1 since the consolidation rate is likely to drop by at least three percentage points to at least 3.25% — the biggest drop in rates in the history of the student-loan program, estimates Mr. Kantrowitz.
Now what is ironic is that I got a letter last week notifying my that if I didn’t switch from the COF index to the LIBOR index, my rates would increase to 11% and 13%.
Assuming this article predicts the drop in rates correctly, my loans will have dropped nearly 10% within a matter of months…. That is awesome.
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The loans that the letter was referring to were your alternative loans, weren’t they?
The consolidation rate that the Wall Street Journal article was referring to was for FEDERAL consolidation rates.
Two different things. I hope you switched from COF to LIBOR when you had the chance.