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rates are set by the Federal Government
and you will find the same rates no matter
where you decide to consolidate your loans.
If you use the web to search for
service companies to consolidate your
student loans, you
will find advertising claims showing low, low rates.
The interest rate on your consolidation
loan is set according to Federal law. Your actual rate may vary depending
on when you took out your student
actual interest rate is determined
by taking the weighted average interest
rate of the loans selected
for consolidation and rounding up
to the nearest 0.125% (1/8%) or 8.25%,
whichever rate is less.
use this worksheet to calculate your estimated rate
You can qualify for the initial low
rates being advertised regardless of where
you consolidate your student loans
if you meet the following criteria:
The low advertised rates displayed on many web sites does not take effect until after
the student loans
that you are consolidating were first
disbursed between July 1, 1998, and
June 30, 2006. Loans disbursed before
this period will have slightly higher
you consolidated your
student loans during your grace period
(the first six months after you separate
from school) and locked-in the in-grace
as explained above and lock-in your
in-grace rate that reduces your rate by 0.6%
from your bank money account. This
is a nice incentive that almost consolidation
companies offer. With automatic draft,
you can lower your initial rate by
an additional 0.25%
for a certain
period of time (usually from 36-60
If you make consecutive on-time payments
for the period stated,
the loan servicer will generally reduce
your rate by another 1.0%
(this rate reduction will remain in
effect if you continue to make consecutive
|the initial consolidation rate for all loans disbursed after July 01, 1998
|in-grace rate if you consolidate your loans while in grace
|your rate if you automatically have your in-grace loan payments deducted from your money account
|your best rate after making consecutive, on-time payments
|Your payment reduction
percentage is subject to the total amount being consolidated
get a high percentage reduction, you will need to consolidate
under the graduated repayment plan, where
your first initial payments are for interest
rate charges only. You will not be paying
down on your loan balance.
FACT: Any student loan consolidation
company can offer the same high percentage payment reduction
if you consolidate your student loans
under the graduated repayment plan
have more information about this graduated
student borrowers consolidate
under the level repayment plan
(payment on principal and interest). Under
this plan, you are more likely to see
payment reduction percentages from 21%-45%.
The size of the percentage depends on
the amount being consolidated.
Note that under the level repayment plan,
your monthly payments
are fixed for the entire term of your
Explanation: Your total payment
reduction percentage will depend on the
amount of debt consolidated and type of
repayment plan. So don't get hooked on
believing that your student loans payments
can be reduced at large percentages.
such as paying on-time every month and automatic
deduction can reduce your rate over time.
web sites claim that you can reduce your
rate by up to an additional 1.25%,
giving you a consolidation rate that can
be as low as 5.375%.
how to get the 1.25% reduction:
must make consecutive on-time payments
for up to 36 months or more. The
number of months may vary by consolidator.
Note that in most cases, you must continue
to make on-time payments to maintain
the full 1.00% reduction.
Many of our partners offer the full
1.00% reduction after 36 on-time, consecutive
we have more information the 36-month
authorize your monthly payments to be
automatically deducted from your checking
or savings account. If you stop this
method of payment, the 0.25% rate reduction
will likely go away.
Answer: Let's summarize the
benefits offered by almost all consolidators:
- You can reduce
your consolidation rate instantly
by 0.25% if you authorize automatic
- You can reduce
your consolidation rate by up
to 1.00% after paying consecutively
on-time your payments after 36 months.
Generally, these benefits will continue
only as long as you continue to have
your payments automatically withdrawn
and paid on time.
See what incentives
you can get
from our partner at Educational Direct.
success of your consolidation experience
will depend on the strength and depth of
your consolidating service company.
- the same rate,
- the same repayment reduction plan,
- similar rate reduction incentives
What distinguishing factor separates
one consolidating company from another.
Check the Company History and Service
Our consolidating partners are the
leaders in student loan consolidation.
They have helped over a quarter
of a million customers consolidate their
student loans. These are customers
like yourself who put their trust in a
company with a history, service operation,
and reputation for getting the job done
So when you are confused about who you
should consolidate with, pick
the company that has over a quarter of
a million facts.