willida said:I put my consolidation in to UHEAA on March 23rd (no Utah ties) and got a letter today saying they were starting the consolidation process and that it would be 30-45 days to finish. I will be calling on Monday to find out if I will be getting the 1.25% or 0.5% reduction. I will update later on Monday. Not sure why I got in and others didn't ($28,000 in loans by two lenders).

Also, if there is a deadline about getting the 1.25%, should I call and have my info faxed to UHEAA? Thanks.

the deadline is the disbursement date (before may 1). We're in a race, I also put mine in the 23rd. Calling to try faxing can't hurt, but I got nowhere with it.

EDIT: Uheea was less than helpful, but I did get directloans to agree to fax my lvc back to uheea's Loan Originiation Dept. at 801-366-8430 without any difficulty. Directloans received my LVC 4/4, I spoke with them today.

Crossing fingers.

I am seeking some answers on my situation if interested!

I consolidated my student loans 3 years ago with a company called Sun-Tech, Citibank recently purchased my loan from SunTech who I received many letters from reassuring me I would not have to do anything, the transition would be smooth, and they would continue to deduct my monthly payment through my checking account... Well I decided to go online to review my account and I noticed Citibank raised my interest "benefit" rate from 5.625 to 6.625 - which was not stated in any of the 3 letters I received from them. They only stated I would continue to receive my .25 deduction for using automatic debit. The "benefit" rate provided by SunTech was given to me for no defaults over 3 years and automatic payment deduction (the original rate was 6.825). Is it legal for Citibank to raise the rate? What is the point of consolidating if after making regular payments, they still find the way to raise the rate.

Although this article may not contain any new info, I still found it helpful.

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

Every consolidator I spoke with says that the interest is fixed when you consolidate and they sell loans only if buyer continues to observe their original agreement.

Sure is puzzling.

ThiftySpender said:klei said:I am seeking some answers on my situation if interested!

I consolidated my student loans 3 years ago with a company called Sun-Tech, Citibank recently purchased my loan from SunTech who I received many letters from reassuring me I would not have to do anything, the transition would be smooth, and they would continue to deduct my monthly payment through my checking account... Well I decided to go online to review my account and I noticed Citibank raised my interest "benefit" rate from 5.625 to 6.625 - which was not stated in any of the 3 letters I received from them. They only stated I would continue to receive my .25 deduction for using automatic debit. The "benefit" rate provided by SunTech was given to me for no defaults over 3 years and automatic payment deduction (the original rate was 6.825). Is it legal for Citibank to raise the rate? What is the point of consolidating if after making regular payments, they still find the way to raise the rate.

I would get the student loan ombudsman's office involved. But in reality, there isn't much you can do. Isn't the law great that lenders can buy and sell your loans as you please but you cannot refinance your student loans or threaten to do so and they can change benefits at their personal will? /sarcasm

The single-lender rule will soon be history. See WSJ article below.

Senate Repeals Student-Loan Rule
16 June 2006
The Wall Street Journal
(Copyright (c) 2006, Dow Jones & Company, Inc.)

WASHINGTON -- The Senate repealed a rule that limits the lenders from which borrowers can consolidate student loans.

The 98-to-1 vote clears the measure, which was added to a $94.5 billion emergency spending bill to pay for the wars in Iraq and Afghanistan and provide aid to Gulf Coast hurricane victims. The House passed the bill on Tuesday, and President Bush is expected to sign it.

The bill repeals the so-called single-lender rule that requires students to seek a consolidation loan from one of the lenders that had originated the student loans they are seeking to consolidate.

Congress authorized lenders to offer federally guaranteed and subsidized consolidation loans as a way to simplify student-loan repayment.

it became effective last friday.

Apply with Direct Loans, just to get the application in (if you really want to... and they are subsidized).

Remember, the SLR (Single Lender Rule) no longer exists. Sallae Mae cannot refuse anymore is my understanding. You don't even have to go with Direct Loans, but with any lender (see the other loan consolidation thread on these boards). If Sallaw Mae is still saying the SLR exists, they are wrong.

If you are just looking to lock in the rate though, I would go ahead and consolidate with Direct (since they seem to have your information already). That's probably the fastest, but keep on top of them... they sometimes have things slip through the cracks.

You can no longer consolidate just a consolidation loan. However, you should be (and have always been) permitted to consolidate a consolidation loan with a NEW loan. For example: Consolidate your curent loans, next year, you take out another loan, you can reconsolidate these loans together.

dobiegirl said:Hello, Thanks for all the info on the single lender rule. I have read extensively, however was wondering if anyone could give input on my situation. My daughter has two government loans with Sallie Mae and one with Direct Lending. She's still in school. Her college switched from Sallie Mae to Direct lending so she did not have a choice on the last loan with Direct. We would like to consolidate Sallie Mae's loans with Direct which Direct said would not be a problem as we have a least one federal loan with them and not all loans with Sallie Mae. However Sallie Mae states they have the option to refuse a payoff letter to Direct and they will. They stated we could only consolidate with them. I understand some of the single lender rule, however some of them I think referred to loans already consolidated. None of her loans have been consolidated as of yet. So I contacted several people regarding this and all I get is Direct saying Sallie Mae is stalling to try and get my daughter to stay with them and Sallie Mae stating the law is on their side and they will not release her two current loan payoff to Direct for consolidation. We were hoping to meet the June 30th deadline. Direct said to go ahead and apply and they will request a payoff and Sallie Mae said they will not send it. I don't know where to turn next. I appreciate any suggestions you may have. Thank you all!

If your daughter is still in school, Sallie Mae is actually mostly right. The loophole that was most commonly used to get in-school consolidations involved putting the loans into "early repayment" so that they were eligible for consolidation. Everyone except Sallie Mae will honor the request to put loans into early repayment, but they maintain they have no obligation to do it. However, 1) I believe the fact that your daughter has a Direct loan already makes her eligible for an immediate Direct in-school consolidation, and 2) there is another loophole - if Sallie Mae won't offer her income-sensitive repayment terms that she likes, she can get a Direct consolidation loan. So have her call Sallie Mae and ask what income-sensitive terms they'll offer, then tell them they're not good enough (Direct's are almost certainly better) and submit the application to Direct.

Also, look up your local branch of the Department of Education and call them to complain/ask advice. Maybe you'll learn something useful, or at least blow off some steam.

I am looking for some advice here. I have read most of this thread and used the information here (as I posted about several time) to convert $45k PHEAA to Federal Direct and the Federal Direct to Uheaa!

============================

Now, I am trying to help my gf move her laons from Citibank to Uheaa. She just finished medical school and she has federal loans in two places:

Loan #1: $140kish @ 2.6% w/ Citibank (repayment)
Loan #2: $40kish @ 6.1% with PHEAA (AES) w/ Citibank as the financer. (not in repayment)

She entered repayment earlier in order to consoliate a majority of her loans ($140k) before the rates increased. (very good!)

HOWEVER

She than tried to "add on" the $40k w/ Pheaa to the $140k. At one point she received a letter from PHEAA asking her for permission to release the $40k to Citibank, she mever signed/returned it and the loans were never released. (very bad!) Several months later (now) her mistake was finally releazied. She assumed everything was fine, she even called Citibank every few weeks, and the clueless CSR's never mentioned the missing form. So, after a few frustrating phone calls and an "investigation" she received a letter (yesterday) that there is no way to add the $40k to the $150k.

Is it possible for me to consolidate these loans with Federal Direct or UHEAA and keep the low rate on the $140k?

Is there something else I should be doing?

Interesting to see the reference to the "super two step".


AFX International Focus

August 1, 2006

HEADLINE: Student loan consolidation apps pile up


NEW YORK (AFX) - Once again, the student loan industry is facing a backlog of applications from borrowers who want to consolidate their debt and lock in low rates.

Although far fewer students and recent graduates submitted applications ahead of the July 1 deadline than last year, the bulk of them have yet to be processed and may not be funded before the fourth quarter.

. . .

For the lenders themselves, the picture is also mixed. Consolidation loans yield less than unconsolidated Stafford and PLUS loans, but they also have higher balances and longer terms. That means lenders may collect more interest over the life of the consolidated loans.

But lenders also risk losing loans when borrowers choose to consolidate with a competitor. This forces them to write down the gains they booked when the loans were pooled.

Sallie Mae, which accounts for roughly half of the student loan market, said it lost $1 billion of FFELP loans in the first half when borrowers consolidated with other lenders.

Nelnet said over half of the consolidation volume it experienced in the first half represents loans lost to other lenders.

Both companies attributed the bulk of the losses to a process known as 'super two-step' whereby competitors used another program, the Federal Direct Student Loan Program, to get around a prohibition on refinancing previously consolidated loans. This process was no longer available after the end of the first quarter, and Sallie Mae and Nelnet expect to hold on to most of the consolidation loans that are still being processed.

Prepayment speeds are likely to slow by the end of the year and remain relatively stable thereafter due to change in the FFELP: Stafford and PLUS loan taken out after July 1 carry fixed rates of interest.

That means borrowers will no longer have the same incentive to consolidate their student debt, at least in a rising interest rate environment.

The primary reason for borrowers to consolidate student loans then will be to lengthen the terms of their debt, and in so doing lowering their monthly payments. Consolidation loans have terms as long as 25 years, compared with 10 years for Stafford and PLUS loans.