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Student Loan Consolidation

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jmills
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Student Loan Consolidation  Reply with quote  

Hi Guys, I'm new to this site and would appreciate anyone who can give some advice.

I recently graduated college, and currently have $53,500 in private loans through wells fargo, including the interest that has already generated. I also have about $24,000 in government loans. The advice I'm looking for is mostly about the private loans. The $53,500 is in two loans, one with a principal of 25,000 at 10.24% interest. The other is a $20,000 at 9.24%. They have gained a combined $8,500 in interest over the past 2 years. They are in grace until january 2013, but that obviously doesn't stop the interest accumulating. My question is about consolidation:

I called Wells Fargo and asked about consolidating into one loan with a lower interest rate. They had me fill out an application, which I had my father cosign with me. They offered me a consolidation loan at 12.59% fixed. Which is obviously absurd, seeing as my combined interest with the separate loans right now is like 9.8%. When I told them that they offered a variable rate, with a margin of 5.2%, which would depend on the prime, and currently added up to 8.75%, but has no cap. It seems to me that neither of those options are worth it. Best case scenario it stays at 8.75, and I gain about 1%. Worst case, the economy soars and I'm looking at a prime of 8% and start paying 13% interest.

Does anyone know why I'm getting offers of such horrible interest rates? They said it is a credit based application, and I'm 22 with a history of about 4.5 years and a credit score of 752. My father has a score of 730, and has had a history of about 30 years. So I don't understand why I'm getting such awful rates. Is there any solution to this predicament? It seems that Wells Fargo is the only company offering private student loan consolidation right now...if anything I've said in here sounds wrong, please correct me.
Post Tue Jun 05, 2012 11:06 pm
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oldguy
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quote:
Does anyone know why I'm getting offers of such horrible interest rates? They said it is a credit based application, and I'm 22 with a history of about 4.5 years and a credit score of 752. My father has a score of 730, and has had a history of about 30 years.


For some reason WF likes the lock that they have on your current loans and considers it good business to keep them. Or there is something in your credit that guides them to not write a new loan. Your father's lower score seems odd - you have a very short history, yet your score si better - does he have some missed payments or a bad loan-to-credit ratio - ie, something that is scaring WF away from placing money with you? I would shop it around at other banks and crtedit unions and see if someone else wants your business more than WF does, 752 is a pretty decent score.

What is your situation? Do you have a marketable degree? And do you have your 'real' job yet or are you working your 'summer' job?
Post Tue Jun 05, 2012 11:40 pm
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jmills
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quote:
Originally posted by oldguy
quote:
Does anyone know why I'm getting offers of such horrible interest rates? They said it is a credit based application, and I'm 22 with a history of about 4.5 years and a credit score of 752. My father has a score of 730, and has had a history of about 30 years.


For some reason WF likes the lock that they have on your current loans and considers it good business to keep them. Or there is something in your credit that guides them to not write a new loan. Your father's lower score seems odd - you have a very short history, yet your score si better - does he have some missed payments or a bad loan-to-credit ratio - ie, something that is scaring WF away from placing money with you? I would shop it around at other banks and crtedit unions and see if someone else wants your business more than WF does, 752 is a pretty decent score.

What is your situation? Do you have a marketable degree? And do you have your 'real' job yet or are you working your 'summer' job?



I'm not sure about why I have a higher credit score. My father may have missed a payment when he was younger, I don't really know. I've never missed a payment on my credit cards, and other than student loans and and a car loan as of a month ago I've had no other debt.

I have a degree in Information Technology and have a full time job, starting this coming Monday.
Post Tue Jun 05, 2012 11:59 pm
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clydewolf
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Jmills,

Congratulations on your employment.

You should start making those SL payments now, even if it is only to yourself.
That would be a good start for an Emergency Fund.

Are you a member of a Credit Union?
You should check your CU for consolidating you Student Loans.

If you are not a member, check around as many CUs are regional, then join the CU.
Post Wed Jun 06, 2012 12:37 am
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jmills
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quote:
Originally posted by clydewolf
Jmills,

Congratulations on your employment.

You should start making those SL payments now, even if it is only to yourself.
That would be a good start for an Emergency Fund.

Are you a member of a Credit Union?
You should check your CU for consolidating you Student Loans.

If you are not a member, check around as many CUs are regional, then join the CU.


Thank you, I'm glad I was able to get a job right out of school. As soon as I get a couple paychecks I plan on starting to make payments on my private loans, even though that will cancel the grace period.

I'm not a member of a credit union. I just moved across country to where my new job is so I don't know the local credit unions but I'll have to look around, thanks for the suggestion. It would take a VERY long time of making minimum payments to pay them off completely with an interest rate of 10%
Post Wed Jun 06, 2012 1:12 am
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oldguy
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quote:
I have a degree in Information Technology and have a full time job, starting this coming Monday.


Great! on both the degree & the new job. Very Happy

Yeah, I would shop the loans around in your new area, both at the CUs and the banks. Your new employers is probably affiliated with a CU or can recommend one.

As a matter of procedure, you could use credit as much as you an for the next several years and give priority to the 10% debt. Eg, if you buy a house in the next few years, try to make a 0% down payment, and get a 30 yr fixed rate loan, maybe at 4%. By directing minimal cash & cash flow to a house, you can direct more income stream to the 10% debt.

Additionally, a technique that I have used (but not in the last 6 years) is to wait for a house to build up equity, then refi it to the limit and pull out the equity. That way you will be converting your 10% debt to 4% debt.
Post Wed Jun 06, 2012 2:47 am
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jmills
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quote:
Originally posted by oldguy

As a matter of procedure, you could use credit as much as you an for the next several years and give priority to the 10% debt. Eg, if you buy a house in the next few years, try to make a 0% down payment, and get a 30 yr fixed rate loan, maybe at 4%. By directing minimal cash & cash flow to a house, you can direct more income stream to the 10% debt.

Additionally, a technique that I have used (but not in the last 6 years) is to wait for a house to build up equity, then refi it to the limit and pull out the equity. That way you will be converting your 10% debt to 4% debt.


I'll keep this in mind, but I don't plan on purchasing a house in the next several years. But I suppose I still will have student loans hanging around when I am ready to buy Smile
Post Wed Jun 06, 2012 4:51 am
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coaster
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Ya gotta wonder how much of a drag on the economy those scurrilous, outrageous (and probably should be criminal) private student loan interest rates are. Confused

~Tim~
Post Wed Jun 06, 2012 6:42 am
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jmills
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quote:
Originally posted by coaster
Ya gotta wonder how much of a drag on the economy those scurrilous, outrageous (and probably should be criminal) private student loan interest rates are. Confused


Especially in the day and age where you can't go anywhere in life without a 4 year degree. I'm pretty sure it's borderline extortion.
Post Wed Jun 06, 2012 7:04 am
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