Do you know what you lose after you consolidate:

1-Gov. office said that each consolidator has their own rules and they may not have deferment or forbearance programs. However the consolidator we spoke with ( Next Student) said they are all the same as before.

2-How is your credit and FICO affected. Gov said they continue to show it as an item, but 0 balance. Of course consolidator will show it as new loan.

Well, requested a rate quote from Graduate Leverage, and they only offered an immediate .25% rate reduction for auto-debit, then a 1% rate reduction after 18-months. So rate wise, they aren't as competitive as ELC.

They do however offer the following:
-Payment reduction after rate incentive is attained. I think other lenders keep the payment the same, even if the rate goes down. Not sure what ELC does.
-Lender agrees to never sell the loan
-Lender is bound to rate incentives

I think I'll go with ELC unless graduate leverage can match

OK I'm done with all my research on consolidation (12 companies) and ELC is the best one .. so with all due respect, ELC here I come.

Well it looks like ELC is clearly the best option for most of us. I'm from Iowa and I have about 27K in federal loans. I will not pay off my loans aggresively, probably minimum payments. Is the Iowa program with the connection better than going with ELC. I can't directly compare because Iowa offers the principle reduction. It's my understanding that the principle reduction is a better benefit for a short term payment plan. Can anyone correct anything I have written, if not I'll just go with ELC.


Oh yeah can you consolidate perkins loans with ELC. I also have an Iowa Partnership loan that I'm wondering if I can consolidate too, but it's not through the government.


thanks

In a post above it was stated that Graduate leverage sells their loans alway-they are just brokers.


DubSlick said:Well, requested a rate quote from Graduate Leverage, and they only offered an immediate .25% rate reduction for auto-debit, then a 1% rate reduction after 18-months. So rate wise, they aren't as competitive as ELC.

They do however offer the following:
-Payment reduction after rate incentive is attained. I think other lenders keep the payment the same, even if the rate goes down. Not sure what ELC does.
-Lender agrees to never sell the loan
-Lender is bound to rate incentives

I think I'll go with ELC unless graduate leverage can match

duna said:How do these consolidators ever make any profit at these low rates? Especially they lock in the interest you pay them for ever, but their borrowing rates are rising sharply now.

It's off topic but I couldn't resist:

The fed government pays the lenders a subsidy to make up for the low interest rate.

"Recent years have seen a drop in interest rates for student loan borrowers along with dramatic overall growth in consolidation loan volume. From July 2000 to June 2003, the interest rate for consolidation loans dropped by
more than half, with consolidation loan borrowers obtaining rates as low as 3.50 percent as of July 1, 2003. From fiscal year 1998 through fiscal year 2003, the volume of consolidation loans made (or “originated”) rose from $5.8 billion to over $41 billion. The dramatic growth in consolidation loan volume in recent years is due in part to declining interest rates that have made it attractive for many borrowers to consolidate their variable rate student loans at a low, fixed rate.
• Recent trends in interest rates and consolidation loan volume have affected the cost of the FFELP and FDLP consolidation loan programs in different ways, but in the aggregate, estimated subsidy and administration costs have increased. For FFELP consolidation loans, subsidy costs grew from $0.651 billion for loans made in fiscal year 2002 to $2.135 billion for loans made in fiscal year 2003. Both higher loan volumes and lower interest rates available to borrowers in fiscal year 2003 increased these costs. Lower interest rates increase these costs because FFELP consolidation loans carry a government-guaranteed rate of return to lenders that is projected to be higher than the fixed interest rate paid by consolidation loan borrowers. When the interest rate paid by borrowers does not provide the full guaranteed rate to lenders, the federal government must pay lenders the difference. FDLP consolidation loans are made by the government and thus carry no interest rate guarantee to lenders, but changing interest rates and loan volumes affected costs in this program as well. In both fiscal years 2002 and 2003, there was no net subsidy cost to the government because the interest rate paid by borrowers who consolidated their loans was greater than the interest rate Education must pay to the Treasury to finance its lending.
"In our prior report, we recommended that the Secretary of Education assess the advantages of consolidation loans for borrowers and the government in light of program costs and identify options for reducing federal costs. Education agreed with our recommendation."

Full report here

The loan companies are making piles of money. The loans have little risk because they are guaranteed and even the interest rate is subsidized. It's essentially free money. Plus sallie mae makes even more money by screwing up their calculations on when they rec'd your payment and how the interest should actually be calculated etc.

Hello,

From what I can tell, for those who have ALREADY consolidated in prior years and have new loans, Graduate Leverage seems to be the best option for the following reasons:

1) all federal loans (including perkins) will be consolidated at the previous consolidation's interest rate (2.875% in my case) provided the borrower signs up for electronic payments
2) even if you lost your grace period with the previous consolidation, they will essentially re-instate it (you'll automatically be put in forbearance for 6 months and the lender will pay all interest on subsidized loans)
3) get 1% interest rate reduction after 36 "timely" payments; although everyone seems to offer this, GL seems to be unique in that after the reduction your monthly payments will be reduced (i think most others continue at the same monthly payment, but you pay off your loan earlier); also, they say this is for 36 timely payments, so if you ever lose this benefit, you can requalify with another 36 months of on-time payments
4) the lender (Brazos) and administrator (SAF) have signed contracts not to sell the loans or change the benefits

In my case, this all seems to be perfect. My question for anyone consolidating is, what happens if a lender goes bankrupt and had to sell the loans? My understanding based on the Promissory Note was that the highest the interest rate could go on any Federal Consolidation Loan would be the weighted average of the consolidated loans at the time of consolidation (3.25% in my case), regardless of the lender or the loan being sold. So in this case, all you would lose are the borrower benefits. Is this true?

However, I've heard other people say these loans could be sold at "the prevailing market interest rate." I don't know how that could be possible given the Promissory Note (which is the same for all Federal Consolidation Loans). Anyone have any information on what happens if a consolidated loan is sold???

Thank you

johnnyrico said:Hello,

From what I can tell, for those who have ALREADY consolidated in prior years and have new loans, Graduate Leverage seems to be the best option for the following reasons:

1) all federal loans (including perkins) will be consolidated at the previous consolidation's interest rate (2.875% in my case) provided the borrower signs up for electronic paymentsIs that true of all their consolidation deals? I consolidated $80K last year as you seem to have done, then got this years $40K issued by a different lender in the hope that I would consolidate with UHEAA (but of course they changed their terms) and now I have another $40K coming for next year.

If what you're saying about GL is true, that would top every single other deal for me too, since I could presumably get my $160K in loans at a pre-benefit rate of 2.875% instead of the weighted average of 5% (the way rates are headed). So is this true of all of GL's consolidation deals? Their website isn't very helpful and their offices are closed right now.

I consolidated my student loans over 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.
Is it possible to re-consolidate with a private lender at a lower rate?
possibly with a lender who wont sell my loan again I am desperate to get out of the 6.625 Citibank rate

Regarding Graduate Leverage,

I received my recommendation after giving them my information after a GL rep gave a presentation at my school. I think like 20,000 people across the country signed up for the recommendation which states the terms I previously described, but I have no idea how many have actually signed up to consolidate with them (I'm still trying to work out the details to make sure I don't get screwed somehow). So to get their terms, you should probably just call them during business hours, give them your info (SS Number, I think), they'll look at your federal loans and tell you which deal you qualify for.

But basically, to achieve last year's rate with them, you would have to have consolidated your federal loans last year at 2.875% (otherwise they will just match whatever your previous consolidation rate was) and have new unconsolidated federal loans since then (or maybe don't have to be new, just unconsolidated).

It sounds like a really great deal. If you go with them, US Bank will originate the loans, Brazos will fund them, and SAF (Student Assistance Foundation?) will administer them. The lender (Brazos) and administrator (SAF) signed contracts not to sell the loans or modify benefits. However, if the lender were to go bankrupt, they could still sell the loans (which is the case with any lender), so I'm trying to figure out what happens in this worst-case scenario (whether it's unlikely or not). My understanding is that in the remote possibility it is sold, the highest the interest rate could go is the weighted-average of your loans at the time of consolidation (3.25% in my case). If this is true, I'll definitely go with them since this "worst-case scenario" is quite tolerable.

Johnny Rico