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I am transfering this question from the Credit Card board.

Got me 14 separate loans from Sallie Mae for undergraduate, around $44,000 total. They are all Stafford Subsidized and Unsubsidized loans. I capitalized the interest on the Unsub loans, so they are still growing and have been for years. Currently in Grad School in deferment. I am thinking about consolidating the 14 into 1 loan, and from what Ms. Sallie told me on her website, I would have a rate of about 4.2 or 4.3 % on that one loan (dropping the estimated montly payment from about $800 to about $500 over 30 yrs, although I am not sure why). My questions are these:

One person over in the other forum suggested that I NOT use Sallie May for my consolidation. But I am worried about staying IN deferment when I consolidate, and have been under the impression that using a private lender to consolidate would cause me to be kicked out of deferment. Is this true? And who do I go with (I am in Massachusetts, if that matters) if not Sallie?

Aside from the interest, for future purposes do I simply LOOK more attractive to a lender if I have ONE loan at 4.3% rather than 14 ranging between 2.2% and 4%? While I am not doing it now, if I wanted to say buy a house or a car in six years or so, would I look more attractive and get a better rate if I had just one loan on my CR? (I think I already answered this in my head...)

And finally, if I plan to be out of deferment when I finish grad school in 2009--which is only 4 years away--is it better for me to simply stay defered until then and worry later, or begin paying back the loans and ask for a payment reduction due to financial circumstances? How long will an abatement last? How long can I be seen as poor in Sallie's loving eyes before she comes a-callin' for the real meaty payments? I can't do the $500-$800 monthly now.
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Greetings, kydodson, as a veteran of consolidating loans after medical school (read my posts on this board!), I can unhesitatingly advise the following:

1) RUN AWAY from Sallie Mae and instead look VERY SERIOUSLY at Direct Loans (the government's own lender). They are far kinder in terms of customer service and appropriate repayment plans that are not offered by other lenders (for instance, the Income Contingent plan). In fact, since all of your loans are held by Sallie Mae, you may need to invoke this type of payment plan unique to Direct Loans to get your loans away from Sallie Mae (due to the Single Holder rule which they will argue permits them to keep you in their clutches)

2) EVEN UNDER CONSOLIDATION you may qualify for a deferment which would keep interest from accruing on your subsidized loans - there is a mechanism for identifying which of your loans are subsidized and consolidating them separately from your unsubsidized loans. Two possible deferments that come immediately to mind are the In-School deferment and the Economic Hardship deferment. If in a deferment, you are not obligated to begin repayment even if consolidating

3) Even if you establish a repayment plan of one type, you can change it later. So if the repayment plan you SAY you will use to get your loans out of Sallie Mae's hands does not suit you, there is a way to make a later decision about it once the loans are safely under Direct Loan's umbrella

4) The new rates for 2005 are announced in late May and put into effect on July 1. If the rate to come is LOWER than now, don't consolidate just yet (but DO keep an eye on any pending legislation about how student loans will be treated by Congress). If the rate to come is HIGHER than now - which is expected - you have until June-ish to complete the consolidation process (but start as early as you can due to the near-certain roadblocks Sallie Mae will throw up to prevent losing your loans). Since the likelihood is so high of higher interest rates, it could be argued not to wait until late May and the rate announcement

Here is how to reach Direct Loans to ask questions:
www.dl.ed.gov
(800) 848-0979

and read back over old posts on this board for, say, the past 2-3 years and you will receive a sterling education in student loan processing. Be on the lookout especially for posts by W505a (the board's veritable expert in student loans), by me - xraymd - who has had significant experience with consolidation and reconsolidation, not to mention deferments and by LadyIanna who struggled to get her loans away from Sallie Mae to Direct Loans.

xraymd
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Just a couple of things that I thought of that xraymd didn't mention.

IF you are still in school you are eligible for an inschool deferment. (assuming you are half time or over) Take advantage of that. Look through your loan balances and pick out a low balance that is unsubsidized and if you can afford it send payments to Sallie with a letter stating that you want your payments to go to the principal on THAT loan, and that loan only. By sending a letter, and not a payment coupon, you effectively skip the computer processing and get "special" handling of your payment. You also effectively make best use of your payment by paying on the loans that if in future, you have to defer or forbear payments, then it will not accrue interest. This will make your overall loan balance less, as you will have a lower outstanding balance, and less interest accrued on it.

You don't have to consolidate ALL the loans. You could consolidate just some of them. This in effect leaves you the option of re-consolidating later if something more promising comes along. (like you get a loan with Direct Loans (GOV ED.) and want to consolidate with them. Play around with the numbers to see what works best for you. Keep in mind, that the interest rate on the consolidated loan will be the "weighted" average of the current interest rate on the loans at time of consolidation. Make sure that the interest rate is Fixed, and will be locked in. (Advantagous now because interest rates are very low. Not advantageous in the 80's because they were high.)

From what I've been told by banks et al, How many student loans you have does not affect your getting a loan. (unless of course you have my outstanding balance of 80K+. [very long, very nightmarish, horrible story] [probably should appear in book form to allay stupidity costs.])

Student loans are considered "good debt" As long as the re-payment amount isn't a large portion of your income. (in my case it appears at something like $900 a month, depending on who & how you look at it. currently more than I make.) Most lenders will just pass right by those loans. ON the other hand.... they will show up on your credit report as 14 separate loans, and will take up alot of paper. BUT if you consolidate them, they will still show up as 14 loans for 7 (?) years and one consolidation loan for 7 years from the date of consolidation. (assuming you consolidated them all into one loan, two if two consolidations) Sooo... it's 6 of one 1/2 dozen of another as far as the credit report confusion is concerned. Though a good lender should have no problem digging through the whole mess. You ..as a person... on the other hand may have a hard time keeping track of them all.

Anywho...those are a few additional things to think of. I'm sure I've got more..but I don't want to overburden your brain. (mine's overburdened enought for the whole world!!)


Lady I, still trying to fight the good fight.
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Your deferments are still always available under Direct Loan consolidation. You always want to consolidate as separate individuals--never cosign a spouse's loan!

People on this board generally avoid the large private consolidating companies like Sallie Mae. My own feeling, is that the thing ought to be looked at more like a criminal syndicate--shaking down young people for money, and then go crying to both Congress and the schools of higher ed at the other end of the money trail, whenever Congress tries to curtail their role in the program!

I see this as little difference compared to the mobster who runs a shadowy loansharking operation, and then pays the local police and/or assemblyman/judge to "look the other way".

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Reading and thinking, reading and thinking...
Ok, I see from all the posts around here that wrestling your loans from Sallie can be difficult if not impossible. All of my loans are with Sallie (although on one credti report, they are listsed as Sallie Mae 3rd Party... does that count as NOT being Sallie Mae? I know my lender was Chase for the actual cash when I was in school.) And I don't have any Platos, Pluses, etc. What do I do to actually start the process of getting my loans from Sallie if that it what I want to do? Call them? Write them? Just apply to Direct Loans and then deal with the fallout later?

Next question: I am in deferment. I am in a PhD program, and I won't be done until about 2009. so I am defered through my current school (I checked, and its all cool). And Sallie WILL let me consolidate while in Deferment. Direct Loans' website was less clear about this, however. Anyone tried to consolidate with Direct while in deferment? Do I have to come out of defer, move the loans to direct, then go back into defer? is that possible even?

Finally, Exactly what is the difference between consolidating with Sallie and doing so with Direct? I understand what people are saying about Sallie being an evil corporation, but other than those who have DIFFERENT loans and Sallie wasn't crediting right, is there really a difference? The loan rate would be the same on the consolidation. The term would be longer with Sallie (from what I can tell), and I know I can do it now. If it is so hard to get your loans from Sallie over to Direct, and I'll probably be fighting long after interest rates go up, shouldn't I just consolidate with Sallie and go for rate now over customer service later?

Still confused...
ky
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I am in a PhD program, and I won't be done until about 2009. so I am defered through my current school (I checked, and its all cool).

Passing thought: could you borrow from someone else real quick, to get loans with another party to allow you to consolidate with Direct? :-)

when in doubt, accumulate more debt!

-A
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Anyone tried to consolidate with Direct while in deferment?

Greetings, ky, I have both consolidated and RECONSOLIDATED my loans with Direct while under deferment and the deferment was protected each time. The reconsolidations were done to take advantage of unique offers to further lower my interest rates (details are elsewhere - this was done in 1999 and 2000 and can be read about in my posts on this board at that time). The bottom line is that if anything seems confusing on the website, call and ask a rep about what is possible and if necessary, ask to speak to a supervisor. (800) 848-0979

Exactly what is the difference between consolidating with Sallie and doing so with Direct? I understand what people are saying about Sallie being an evil corporation, but other than those who have DIFFERENT loans and Sallie wasn't crediting right, is there really a difference? The loan rate would be the same on the consolidation. The term would be longer with Sallie (from what I can tell), and I know I can do it now. If it is so hard to get your loans from Sallie over to Direct, and I'll probably be fighting long after interest rates go up, shouldn't I just consolidate with Sallie and go for rate now over customer service later?

The exact difference between consolidating with Sallie Mae and with Direct IS the customer service and that's why Sallie fights so hard not to let you go. Once they have you they can make your life a hell (just read posts by bleplatt and LadyIanna) because they KNOW you have no recourse. Direct Loans has actual incredibly helpful people who really problem solve where necessary - I have made great use of the Ombudsman's office to excellent effect (and have posted about it here) and deeply doubt that Sallie Mae has even heard of such a thing.

It is mid-January. You have time to wrest your loans away from Sallie but you probably want to start now. Here is a big hint: you control the date of the consolidation by when you submit the paperwork - so if you wanted to try to get your loans over to Direct Loans, it may be possible to sit on the paperwork to pull the trigger until you are ready, once you are assured that your loans really are under Direct's cloak. The point being that there is no harm in starting to get your loans moved over NOW because you may indeed not be committed one way or the other just for starting the process. (You will want to inquire about exactly when capitalization will take place during this process if you have not been paying off the accrued interest.) Read especially over posts by LadyIanna to get an idea of what it took her to get her loans under the shelter of Direct Loans. Frankly, customer service is what really can make or break your future financial security and peace of mind regarding student loans. So don't be thinking that it doesn't much matter because the rates are the same. It does.

xraymd
holder of some jumbo student loans from med school and grateful they are with Direct
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You know, I can't help but think that this subject line would make a great T-shirt...........

sell at conferences and what not

(maybe to pay off student loans)
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RE-consolidated? Didn't know you could do that. This is indeed a brave new world...

Ok, I'm sold. I'll contact Direct and see what we can do about dear aunt Sallie. Thanks for all the help... keep you posted.
ky
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ps-
Can't borrow again. All my tuition is currently covered by my fellowship, and while I could do some serious lying, the faint thread of morality I have left just won't let me do that.
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you know those movies where the vampire hisses and draws back whenever garlic or the sun appears?

that's what I do when I think about Sallie Mae

maybe I should stop drinking and posting?
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RE-consolidated? Didn't know you could do that. This is indeed a brave new world...

Greetings, ky, although you CAN reconsolidate, don't get too excited just yet. The only time you would ever want to reconsolidate is if some sort of incentive rate reduction offer is being made that would cut the interest rate you pay compared to not reconsolidating. This circumstance happens about once in a blue moon, and probably not likely at all without the blue states in the Congressional lead. But it DID happen in 1999 and again in 2000 and that's when I learned that reconsolidation is indeed possible. But that does not imply that it would also necessarily be beneficial! Due diligence is required here.

xraymd
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maybe I should stop drinking and posting?

Or maybe you're not drinking enough! ;)

jmc
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The only time you would ever want to reconsolidate is if some sort of incentive rate reduction offer is being made that would cut the interest rate you pay compared to not reconsolidating. This circumstance happens about once in a blue moon, and probably not likely at all without the blue states in the Congressional lead. But it DID happen in 1999 and again in 2000 and that's when I learned that reconsolidation is indeed possible. But that does not imply that it would also necessarily be beneficial! Due diligence is required here.

So what if the super low fixed rates disappear? Would that be an appropriate incentive to consolidate (for those who haven't yet)?

jmc (no "re" yet. Heck no consolidation yet. Even greater heck, still borrowing!)
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Greetings, jmc, I would think the incentive to consolidate would indeed be under threat of watching the super low rates disappear especially when there is still the opportunity to turn them into FIXED rates by July 1st of this year. Even if you are still borrowing, could you consolidate what you've borrowed so far (it sounds like you would even qualify for the in-school rate which is a full 0.06 percent lower than post-graduation rates, if I remember correctly)?

xraymd
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Ditto whatever xraymd says.

My latest potential nightmare with student loans was when the community college (that shall remain nameless--but New Jersey only has so many!), they messed with my student deferment form.

I explained the situation to Direct Loans. It looks like someone at Direct placed a call to the registrar there, and said, "look is he a registered student for that semester?" And they had to say, "yes".

Some bitchy lady in the registrar's office insisted that a student deferment is only good for the weeks when class is in session. The "SCH" form asks two pieces of information: the dates of class attendance and the anticipated graduation date. This person decided that this was an "either/or" choice of the school, rather than that the government is looking for BOTH pieces of information.

The dates of class attendance proves the "enrolled on at least a half time basis" requirement for the deferment. The anticipated graduation date tells when the date of the in-school deferment should end.

Granted, not everyone graduates! But that doesn't mean there isn't some date in the future when that school does not hand me a nice green folder with a certificate/diploma in it! (Ooops I narrowed down the number of schools!)

This woman--and her idiot boss the registrar--are my 2005 'projects'. I just don't have the energy right now to deal with them.

Thank God for Direct Loans, really. (Thank the 103rd Congress, but that program is in my view divinely inspired as much as Providence has had any doing's in the institution of American government. I am a blue stater, but I will give God His due.)

(Double thanks, that my loans aren't!)
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Greetings, W505a, so SORRY for your hassles with the idiot in the registrar's office and I am indeed grateful to hear that you are working with a capable rep at Direct Loans who appears to be able to help you. Email me off-board if you want a direct line in to the Direct Loan ombudsman whom I trust will be very interested to learn of your travails and to set it (and the registrar's office) straight.

And that is why I am a believer in Direct Loans.

Here is another example: I am now in payoff mode and learned only this year that I could pay over and above my required payment via electronic payments and allocate every penny I pay above the required payment directly and exclusively to my unsubsidized loan leaving the subsidized loan paid last. I noticed a delay in applying the payments properly (though they were always eventually applied correctly with full retroactive interest adjustments) and spoke up about this to Direct Loans...they assigned a supervisor to my case who personally tracks my payments every month because she devised a new method of applying payments to make it effectively instant just because of the issues I'd raised. Now THAT'S customer service!

And that is why I am a double believer in Direct Loans.

Did I mention that Direct Loans is the way to go? :-)

xraymd
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Even if you are still borrowing, could you consolidate what you've borrowed so far (it sounds like you would even qualify for the in-school rate which is a full 0.06 percent lower than post-graduation rates, if I remember correctly)?

xraymd, In the past it seemed like you couldn't borrow if you were still in school & borrowing, but I think that might have changed this year. At least I know I'd get the occasional call about consolidating w/ private companies (yeah, right, like I'd go outside of the Direct Loan program), and these folks said I couldn't consolidate b/c I was still full time. Though the last Direct Loan notice of disbursement I received seemed to suggest that I could now consolidate while in-school -- I believe to specifically lock in the lowest rates in years.

I believe an in-school student wouldn't lose the lower in-school rate (not sure what the percentage difference is though.)

I think I just got a disbursement notice in this afternoon's mail but I've been grading papers & not reading my mail. :) I'll have to check it out. From what W505a has said, it sounds like the ability to fix student loan interest @ low rates is set to disappear.

jmc
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Some bitchy lady in the registrar's office insisted that a student deferment is only good for the weeks when class is in session.

That's crazy! So every summer break, every spring break, and every break between terms would eat away student deferment..... Sheesh!

Thank God for Direct Loans, really.

It really sounds like one of the few government programs that's worked well. Obviously that's why His Presidency :) wants to change it.

jmc
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Just so you know

and I mean this in the most loving way possible

I hate all of you who have loans with Direct Loan.

bleplatt
dis-satisfied Sallie Mae customer since 1998
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Greetings, bleplatt, payoff is the best revenge! If you are shut out from doing a transfer to Direct Loans, could you siphon off little bits of your Sallie Mae at a time by doing a balance transfer of part of the balance to a credit card that you pay down instead of paying down Sallie Mae (assuming that it won't have an adverse impact at tax time because of the interest deduction).

If you are made a sufficiently attractive 0% offer at $0 fee (check out Citibank who seems to be advertising this lately in the Sunday paper magazines) then for THAT portion of your balance you would transfer off, and pay off before the promo expires, you would owe NO INTEREST on it, which beats a deduction hands down. Citibank will even transfer the funds directly into your bank account for you to then turn around and pay Sallie Mae.

The hurdle I see here is being sure that Sallie Mae actually credits your payment to PRINCIPAL rather than doing something stinky like advancing your next due date. But this is one possible way out and I offer it for your consideration.

xraymd
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I hate all of you who have loans with Direct Loan.

Jealousy is an ugly thing bleplatt. ;)

jmc
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yeah. I know jealousy is an ugly thing, but I can handle ugly. It's screwed up CS that I can't handle.

Actually, xraymd, I am having zero percent interest on my SM loans by the simple virtue of taking 6 UDGR credit hours a semester (a la W505). This semester-- ballet, costume technique (or Home ec sewing 101, as the teach named it) and/or Voice Class 2 OR Intro to Visual Arts (ooh pretty pictures!). :D

Last semester? Ballet, Modern Dance and Handmade Tiles

Cost to me? Under 300 dollars thanks to my employee discount.

Estimated (god willing) accelerated/snowball student loan payoff? 4 years (aka 10K per year)

Feeling like I'm getting one over on Sallie Mae? Priceless

:D
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Feeling like I'm getting one over on Sallie Mae? Priceless :D

ROFL! I wish I could double rec that.

My dream is to have every student borrower with subsidized interest show up at local 2- and 4-year colleges, and matriculate for just one semester. Can you imagine the buzz that would create?
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Thank you for recommending this post to our Best of feature.

you know those movies where the vampire hisses and draws back whenever garlic or the sun appears?

that's what I do when I think about Sallie Mae

maybe I should stop drinking and posting?



Amen to that....

Lady I.
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Some bitchy lady in the registrar's office insisted that a student deferment is only good for the weeks when class is in session. The "SCH" form asks two pieces of information: the dates of class attendance and the anticipated graduation date. This person decided that this was an "either/or" choice of the school, rather than that the government is looking for BOTH pieces of information.<i/>

can you imagine how many people got screwed over by this lady? How many students took her word for it? Someone should call for an all out audit in this situation.

This is really scary and just goes to show, that you should never take anyone at their word. investigate for yourself and collect information from different sources, and extrapolate the best possible answer.

Lady I, really wishes she knew then what she knows now. (maybe I should start a Student loan advice program. Or just send everyone here...to this board.)

BTW...maybe we should re-name the board, How to get back at Sallie Mae without breaking the law! :)
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