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[Kimberly]

I received my undergrad degree back in 1999 and then consolidated my
loans with Direct Loans and paid them off completely over the next few
years. Now I am getting ready to start dental school and will be
taking out student loans for the next 4 years. (some subsidized and
some unsubsidized through most likely T.H.E.) I have read in several
places that you can only consolidate one time. Since I am going to
be at a new school, getting a different degree, with a new loan
company, will I be allowed to consolidate once I graduate?


Also, if I get loans from the same company each year that I am in
school, what is the purpose of consolidating? When I was an undergrad
I consolidated because I think I had more than one loan company and it
made it easier to pay back. If I don't consolidate after I graduate
(even though I use the same company) will it be like I have 4 separate
loans? (one for each year) Or do they automatically roll it into one
big total?

Thanks in advance,
Kim

[Steve Blank]

The rule is that you may consolidate the same loans only once. Yours
will be new loans so they can be consolidated once after you graduate.

Consolidating your old loans that were with multiple lenders did make
the payment process easier for you - but the real advantage to
consolidation is that you freeze the interest rates. Stafford loans are
variable rate loans that change each July 1 - up or down - and they
could rise to as high as 8.25%. By consolidating you lock in a permanent
fixed rate based on then current rates and they can't go up if interest
rates subsequently rise. So you're making a bet whether you think
interest rates are likely to go up or down while you're paying off the
loans. If interest rates rose after you consolidated then you made the
right decision.

In 1999 when you graduated, interest rates were pretty high and you
locked in a rate something over 7%. Rates went higher the next year but
yours didn't. However, in 2001 they dropped below your consolidation
rate and went even lower each year after that but yours stayed at the
higher rate locked up in 1999. So it's good that you paid them off
rapidly to stop that high interest.

On the other hand, students who have loans to consolidate right now will
lock in the lowest rates ever, 2.88% if within the grace period, 3.38%
if after the grace period. It's expected that interest rates will go up
in future years but those who consolidate now will stay at these low
rates even if the rates later go to the 8.25% maximum.

If interest rates have gone close to the maximum when you graduate this
time, then you might not consolidate in the hope that rates would drop
at some time and you could then do your one-time consolidation when they
are lower.

As to your multiple loan payment question, if they are all with the same
lender you'd be billed for 4 different loans but the lender should put
it all on one bill - it's less handling for them as well.

--
Steven B. Blank
College Financial Aid Consultants
29 Ives Hill Court
Cheshire, CT 06410
(203)250-7761

Kimberly wrote:

[Guest]

Good explanation Steven.


"Steve Blank" <steve@randallblank.com> wrote in message
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