What should I do? Just call MOHELA and ask them?

Help!

Now I'm a little less nervous about having to take out my first student loan ever this year ( a Stafford Loan)
up until this point I was slaving away to pay with cash...

Stupid rules and not applying to private loans...

When I tried to consolidate a couple of years ago I was denied because I had less than 30,000 in loans. I am now on the graduated repayment plan. Does anyone have experience with consolidating while on the graduated payment plan. I'd love to reduce the amount of interest I accrue

How does this affect people who have to start taking out student loans? We're both contemplating masters degrees and would definitely have to take out loans to accomplish our goals.

And also..the girl in the photo is so pale I thought she was a mime at first.

Could be the coloring of the photo...but I did a double take cause mimes are freaky.

I wonder if it goes below my current rate of 1.25%?

@pecan 3.14159265: I don't believe this affects us at all ... I am in the same boat as you going back for my MBA ... I just took out my first student loan ever and from my understanding I'm locked in with subsidised interest to accruce after graduation at 6.25%.... still better than the variable cap rate of 8.25% for the loans that this new "rule" applies to....

@pecan 3.14159265: the loans that qualify for this consolidation are going to be at least 3 years old...

@pecan 3.14159265: yeah she needs some spray tan or tinted moisturizer or something... a little "glow" would make her look healthier...

This does not apply to federal Perkins loans since they are fixed-rated loans.

@missy070203: Does the prospective cost of a degree make you cry as well? I guess what I'm trying to ask is, if they're going to do this for existing loans, what are the chances the Good Light of Less Painful Debt will shine on us who are looking for loans?

@HogwartsAlum: Last fall, Moehla stopped offering Stafford loan consolidation:

http://stlouis.bizjournals.com/stlouis/stories/2008/02/25/story7.html

However, you may be able to consolidate your loans through the federal Direct Consolidation Loan program:

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

And what about those who have already consolidated our loans? Do we get to "re-consolidate?"

@missy070203: New federal Stafford loans have fixed interest rates which depend, in part, on when the loan is originated. For example, new undergraduate Subsidized Stafford loans first disbursed on or after July 1, 2009 have a fixed 5.6% interest rate. Undergraduate Unsubsidized Stafford loans have a fixed 6.8% interest rate.

For graduate students, the interest rate on new Subsidized and Unsubidized Stafford loans are fixed at 6.8%.

@pecan 3.14159265: It does bring a tear to my eye...lol I'm a single mom and granted I get some financial aide but its not enough I have a 50 hour work week plus classes (mostly online) and up until now I've been able to pay cash for what my aide doesn't cover but the cost for the MBA is much higher so I'm forced to take out aprox. 2400.00 a semester in stafford loans.... hopefuly they will be as kind to us in 3-4 years when we are outside our grace period and paying 6.25-8.25 % on our balances...otherwise were screwed to pay higher interest on the same education.... my goal is to make payments before my sub. interest accrues... but that leaves my already tight budget pretty tight...

Can't you only consolidate once? The rules really should be changed on this one, if you can refinance a mortgage multiple times you should be able to "refinance" student loans as well (perhaps pay some fee to do so).

@bobbycreekwater: if it did wouldn't they owe you money?

@TheSpatulaOfLove: I think you can reconsolidate only if you have added loans, like grad school

@TheSpatulaOfLove: Nope...

Oh for ***** sake, I just submitted to have all of mine consolidated in the next week or two. *sigh*

I locked in my rate and consolidated at 2.75% years ago. One of the few good things I managed to do.

I already consolidated my undergrad degree. I am attending grad school part time (company paid).. could I.. take out a tiny loan for one class then say "Oh I need to re-consolidate"

my rate now is 4.7%

If they actually cared about how much everyone paid they would just automatically give everyone the lowest rate without forcing people to wait for arbitrary "opt-in" dates, force you to find obscure information online about how to do it, and then meet requirements of questionable necessity.

@missy070203: The cost of education is painful! We're looking at at least $7,000 a semester for just two classes.

@TheSpatulaOfLove: You can consolidate a new loan with a previous consolidation loan, or you can consolidate two or more consolidation loans together. Unfortunately, you cannot reconsolidate just a single consolidation loan.

It's important to note that consolidated loans have fixed interest rates. So if you're consolidating a previously consolidated loan with a new Stafford loan, the new interest rate will be based upon a weighted average of the interest rates on the loans being consolidated.

More simply put, you run the risk of raising the interest rate on a previously fixed-rate consolidation loan if you consolidate it with a new loan that has a higher fixed-rate.

So my wife just took out 20k in federal unsubsidized stafford loans for her masters degree last year. They were at a fixed rate of 6.8%

Are we able to consolidate the loan under a new lower rate?

When is the govt going to fix the mess they have caused by forcing students to pay flat 6.8% interest rates?

@pecan 3.14159265: This is about what I paid for my MS, about 3500 x 10 classes. I paid for it by putting my undergrad student loans on hold and funneling that money to pay for my MS. I was able to set up a payment plan through a company that my school contracted. This way, at least I didn't have to come up with the money up front each semester.

@slim150: I'm no expert, but I think you can. Go for it.

So am I reading it correctly; if I have 6.8% Stafford grad school loans taken after 7/1/2006 I can't consolidate down to 2%?

In 2004 I consolidated my undergrad loans to 2.75% - 0.25% for auto-withdrawal, that was pretty sweet.

@SarcasticDwarf: You should try contacting your lender to either suspend the consolidation until after July 1. Or, if you haven't signed the new consolidated loan prom note, you could wait to sign it until after July 1 when the new rates take effect. Of course, the new rates only benefit you if you're consolidating variable rate loans issued prior to July 1, 2006 which hadn't been previously consolidated.

@cc82:
Actually I just checked and my rate is discounted to 4.3% by using autodraft and e-statements, not bad...

@slim150: It wouldn't. Your new graduate Stafford loan would have a fixed 6.8% interest rate. Consolidation loans are based upon a weighted average of the interest rates on the underlying loans. As a result, your new consolidation loan would actually end up having a higher interest rate than 4.7%. And your debt load would be greater than it had been before.

@pecan 3.14159265: I think it's partially a lighting issue, but yeah, she's pretty pale. But pale skin is nice. :)

@ShachiAssaracus: Also, if you consolidate a Perkins loan, you lose eligibility for the loan's forgiveness provisions.

@Saboth: Same here. I finished grad school just before that last huge rate hike and got my consolidation in just in time. I decided it was worth consolidating more than waiting out my grace period until August. Smartest thing I ever did.

nice, this should at least lessen the shock a little bit when you get out of school, and realize that after you pay your student loans each month you're making less than your friends with only high school diplomas :-\

... Why is it that this can't apply to the subsidized Stafford loans I have taken out the last two years.... I want 2% interest. Or the one's I'm going to be taking next year...

Well, at least with the degree I'm working on I'll probably be able to pay them off within only a couple of years after graduation anyway, so I'll probably survive.

@edwardso: The federal Direct Consolidation program does not have a minimum debt requirement for consolidation, so you could consolidate your loans through them. Additionally, the Direct Loan program also offer graduate and extended repayment plans on consolidation loans.

Remember, though, the interest rate drop only affects variable-based Staffords disbursed prior to July 1, 2006. So if all your previous loans have fixed-rates, you won't benefit from a reduced interest rate if you consolidate them.

When I graduated in '04, all I had were the Stafford Loans. I never bothered to consolidate them. They went up and then down (started at like 5%, went up 2% and probably back around 5% now). I now have probably $6K total left to pay. I pay like $200/mo ($50 more than the required min).

Should I consolidate at 2% in July?

@SadSam: Maybe they are hoping you will consolidate your student loans into your mortgage.... considering if you are paying the cap 8.25% on a 10 year repayment term and interest paid on student loans generally doesn't give many tax advantages...consolidating into a 120 mth home equity loan at a givin rate of 5.74% apr simple interest generally 250.00 closing cost and 395.00 aprox. appraisal fee and then being able to deduct that interest paid from your taxes as interest paid on real estate

@Shappie: Yeah I wish this applied to my private loans. My Citi Assist student loans were just hiked up to 8.835%. Oy vey.

@lilyHaze: Since your loans are already in repayment, your consolidation rate would be 2.5% as opposed to the 2.0%, but that's still better than their current rate which is probably 4.21%.

Even though your loans aren't currently consolidated, you'll still reap the benefit of this new reduced rate, at least from July 1, 2009 through June 30, 2010 (at which time the rates will be refixed). However, if you consolidate your loans during that time period, you can lock in at that lower rate.

@cc82:

That sounds similar to my loan through Sallie Mae.

So, do we automatically get a the reduction to 2.00 %?

I also have discounts of %.25 for direct debit and an additional 1.00 % for 36 consecutive on-time payments.

I'll take another %.75 if they are giving it out.

Also: just called them to ask - high call volumes.

I strongly believe that there should be zero interest on student loans. Here in my province of Newfoundland and Labrador, Canada, they've just eliminated the interest on the provincial portion of government-issued student loans. Check out the Facebook group "No Interest!" to see how the Canadian Federation of Students in NL mobilized to get the interest rate dropped from 4.75% to 0% as of March 2009. Students should not be punished with an oppressive debt load for trying to educate and better themselves!

@missy070203:
@pecan 3.14159265: Perhaps the sector of higher education in which I work has a skewed perspective, but among my colleagues, it's a generally accepted idea that MBAs are wildly overrated... kind of like online degrees: marketed like crazy because they're a fat source of income for colleges and universities, but not necessarily always worth it.

They're really only a good idea (and a worthwhile expense) if you absolutely positively need one to get a job or a promotion or if you've really committed yourself to going into management after at least a few years on the job.

Although I don't ordinarily put a whole lot of faith in what these people say, this could make for an interesting read:
[www.insidecrm.com]

For what it's worth, anyway.

Crap, I only have one Stafford loan. I'm guessing there's nothing to consolidate there.

@Crabby Cakes: Are you sure? I have a different loan for every year I borrowed (4). I think there were different lenders involved at many points. All 4 of the loans were from my "subsidized Stafford loan" bucket.

@pecan 3.14159265: I would think your fixed rate will be lower. Most of my loans are variable with one being fixed. The variable are currently at 4.21% and the fixed is 6.8%. As you can see fixed rates suck.