I have quite a lot of student loan debt, and unfortunately, the majority of it consists of private loans. Does anybody know if there is any federal funding or anything I can apply to to shift my high interest private loans to low interest federal loans? Or perhaps there's another way to lessen my rather substantial payback, despite the fact that I graduated several years ago? I've asked an accountant and googled the subject a bit, but haven't come up with much, and I'd love to pay off my debt before I retire.

Student Loan Justice

Reduce the Rate: Rev. Jesse Jackson Joins Movement Against Crippling Rates on Student Loans (March 12, 2009)

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So, under the current system, lenders like Sallie Mae make a lot of money if you can pay your loan and everything goes smoothly. However, they can make a lot more money, particularly the large lenders like Sallie Mae, Nelnet and others, when a student defaults on his or her loan. And the reason is that they sort of get a second bite of the apple. So when a loan defaults, the lenders are paid nearly full book value, principal and interest, but upon default, the loan is literally exploded with just massive penalties and fees. And so, lenders like Sallie Mae, who also conveniently own collection companies, can come back for a second bite of a much larger apple.
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Private Student Loan Consolidation Private student loans cannot, in general, be consolidated with federal student loans.

The whole thing is a massive rip-off designed to indenture the educated. Welcome to the machine.

Outside of programs I am not familiar with, you'll need to work with banks to get consolidation loans at better interest rates. Right now is a great time to do this because interest rates are insanely low. If you have any leverage (home equity, paid off car) I would use it as student loan debt can never be forgiven.

As a worst case scenario, you can transfer the balances to low interest credit cards but I would only do that as a last resort as there is a significant risk involved. The best thing you can do is put extra money towards your debt every month. Use your tax returns, bonuses, etc. to pay off debt.

Quote: Original post by ChurchSkiz
Outside of programs I am not familiar with, you'll need to work with banks to get consolidation loans at better interest rates. Right now is a great time to do this because interest rates are insanely low.

But aren't the loans just based on prime? I have noticed that mine are at a low rate, 4.5% right now (that's about half what they normally are). Even if I were to negotiate a better rate, they'd just go back up, right? What does them being low right now do for me in terms of consolidation?

Quote: Original post by CyberSlag5k

Quote: Original post by ChurchSkiz
Outside of programs I am not familiar with, you'll need to work with banks to get consolidation loans at better interest rates. Right now is a great time to do this because interest rates are insanely low.

But aren't the loans just based on prime? I have noticed that mine are at a low rate, 4.5% right now (that's about half what they normally are). Even if I were to negotiate a better rate, they'd just go back up, right? What does them being low right now do for me in terms of consolidation?

You can get a fixed personal or consolidation loan. If you can get a secured loan (leveraged with equity on a house or car or something similar), then your rate will usually be fixed.

Knowing your credit score will help you with options. If your credit score is low you're going to have to bite the bullet and just put down extra towards your debt every month. If your credit score is good you'll get more legit financing options from banks.

I think it's pretty good. I missed one credit card payment (I just forgot) like 3 years ago, and other than that I've made just about everything on time. Then again, I have a lot of debt, so maybe that hurts me.

I'd love to get my loans fixed at this rate. I don't own a house, and my car is only partially paid off. Who do you recommend I call? A private lender? Sallie Mae?

Thanks, ChurchSkiz. This has been very insightful.

I know citibank offers student loan consolidation services. I dont know what the details are, but you could try emailing or calling them.
Regards,
Jesse

Quote: Original post by CyberSlag5k
I think it's pretty good. I missed one credit card payment (I just forgot) like 3 years ago, and other than that I've made just about everything on time. Then again, I have a lot of debt, so maybe that hurts me.

I'd love to get my loans fixed at this rate. I don't own a house, and my car is only partially paid off. Who do you recommend I call? A private lender? Sallie Mae?

Thanks, ChurchSkiz. This has been very insightful.

I would start with Bankrate.com, they provide comparison studies of different bank lending rates for various loans.

You can also call large banks (wells fargo, bank of america, BB&T) to see what their rates are, you can usually find the numbers on their web sites. I would also go to any local banks in your area, especially if you have an account with them. My local credit union is offering a fixed rate personal loan for prime +1%.

All of the above I did for my auto loan when I bought my car.