No. of Recommendations: 8
I have a defaulted on my student loans, and are in collections now. I have (4) loans at the following amount/rates:

-$342 @ 5.6%
-$6,771 @ 6.8%
-$813 @ 3.86%
-$1,152 @ 3.86%


Are these the current balance amounts, including fees and interest? Or are they just the principal amount that you owed when you went into default?

Question being is I am going to consolidate them keeping them in the Federal loan arena for a rate of 6.1%, however in about 2 months I will be able to pay $1000 of it in one go.

Should I wait to consolidate and pay towards certain loans (if so which ones?), or just consolidate now and then take the $1k and pay into the principal?


You can pick and choose which loans you want to consolidate.

If the above is the actual amount you owe, including fees and interest, I would suggest starting the consolidation process with the two larger loans ($6771 @ 6.8% and $1,152 @ 3.86%) now, and then using the $1000, plus enough additional money to completely pay off the two smaller loans ($342 @ 5.6% and $813 @ 3.86%). That would be $1155, plus another $10 or so in interest. You should try to negotiate forgiveness of the late fees.

If the above is just the principal balance you owed when you went into default, then even if you can come up with some extra, you'll probably only be able to pay off 1 loan. In that case, I would suggest starting the consolidation process now on all but the smallest loan ($342 @ 5.86%). When you get the $1000, pay off that loan (again, negotiating to get late fees waived) and use the rest of the money to start an emergency fund for student loan payments so that you can make payments with that money so you won't go into default again. Once you feel comfortable that you will be able to continue to making the payments regularly, you can use the money to make a large principal payment on your student loan.

AJ
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