Can I lower my student loan interest rate?

One of the questions we Student LoanDown bloggers get asked frequently (through comments and our Ask the Expert tool) is, “Can I lower my student loan interest rate?”

Some folks are looking to lower their monthly payment because they’re not able to afford it — others are just looking to decrease the total interest paid to their lender. Here’s the information I usually pass on to those readers.

When student loan borrowers sign their promissory note Click here to learn about third-party website links agreeing to pay back the loan, they also agree to the interest rate detailed in the contract. For some loans this will be fixed and for others it will be variable (a margin that is added to a base rate). For federal student loans made after July 1, 2006, the interest rate is fixed. Most private student loans have variable interest rates.

Your promissory note locks in the terms on your loan (including the interest rate or rate margin). You can’t “refinance” a student loan the way you can with other consumer credit products, but there are options to possibly lower your current monthly payment, reduce your interest rate, or reduce the amount you pay over the life of the loan.

Quick tangent: For those of you still in school or just beginning to take out student loans, be proactive. Understand what you’re borrowing at what rate, so you don’t find yourself unable to make payments later. End tangent.

Now, let’s talk about the options.

Consolidate: By consolidating your student loans, you may end up reducing your current monthly payment because you are likely extending your repayment period. However, that means you would end up paying more over the life of the loan if you continue paying just the required amount each month. But if you’re looking for a little payment relief now and are willing to pay more (or make higher payments later to avoid accruing additional interest), consolidation could be the answer. Your best bet for federal student loan consolidation is through the Department of Education’s Direct Loan ProgramClick here to learn about third-party website links

An added benefit of private student loan consolidation is a possible interest rate change. If your credit situation has improved since you took out your loan (or if you bring on a cosigner), you may qualify for a better interest rate than you previously had.

Pay off the debt: Some borrowers could consider using a different consumer loan (personal, home equity, etc., depending on assets) to pay off their student loan. This option has a couple big things to consider, though. You would lose several benefits of student loans like deferment and forbearance options, as well as the potential tax deduction.

Pay more: If what you’re looking to do is accrue less interest, then the best solution is to pay more money each month toward your principal balance. Even just a little bit each month could add up to big savings over the life of your loan.

Get the debt forgiven: There are some programs that will forgive a certain amount of a student’s debt. For example, there is a federal loan forgiveness option available to students working in public serviceClick here to learn about third-party website links

Use borrower benefits: Ask you lender if they offer any benefits that could reduce your interest rate. For example, some lenders offer a discount if you make your payment automatically.

What other questions do you have about your student loans?

This entry was posted in Budgeting, College, Consolidation, Debt, Federal loans, Financial education, Interest rates, Lenders, Money management, Paying, Preparing, Private loans, Reader questions, Refinancing, Student loans, Wells Fargo Bank. Bookmark the permalink.

431 Responses to Can I lower my student loan interest rate?

  1. Alicia says:

    Hi
    My son was a in Med School and took several student loans. Among them there was a Signature Student Loan that his father cosign. My son died last year, and when we ask for cancellation of the debt, They are telling us that my husband is reponsible for the loan that he cosign. Is this true?

    • Ashley says:

      I believe it is because your husband cosigned. If your son was the only one on the loan then it would be forgiven. Sorry for your lose!

    • Fred says:

      Sorry for your loss. Unfortunately, yes, the co-sig is responsible.

    • Rick says:

      When my son applied for a student loan right out of high school, he was denied because he didn’t have enough work history, I believe was the reason given. So I got the loan for him. Now that he’s 25 and has been working for a few years now, I want to get the loan totally out of my name and into his. After all, it’s his debt, not mine. I just did that to help him when he needed it. So, is this possible and if so, how do I go about it? Thanks

      • Barbara Raus Barbara says:

        Rick – I’m assuming you cosigned a private student loan for him. If that’s not the situation please let me know. If this is the case, your son could consider a private consolidation loan. It would allow him to take out a new loan to pay off the loan in his name that you cosigned. He’d have to meet the qualifications, and it’s possible he might still need a cosigner, but it wouldn’t have to be you. There also may be options to have the cosigner (you) released from the loan after your son makes a certain number of payments. Check with your lender to see if they have an option like that. Now, if you’re talking about a different kind of loan, like a Federal PLUS loan, there’s not the same option as that loan is not in his name, but yours.

    • David says:

      I’m sorry for your loss, but if your husband co-signed, then he is probably liable for the balance of the loan.

    • Brian says:

      Sorry to hear about your loss. Unfortunately, that would be true. See if the loan had a credit life option on it. That option is like a life insurance policy on the debt.

    • Jake says:

      I have a question. I have about 40k in student loans and a terrific credit score. I just applied for my first mortguage; how is it im able to get a 3% interest rate for a home ($190,000), yet my student loans are at 7%+???

      • Barbara Raus Barbara says:

        Hey Jake – Great question. There is a difference in the two types of credit you are talking about. One, your mortgage, is secured. That means your house serves as collateral for the loan and provides the creditor the ability to offer a lower interest rate. The other, your student loans, are unsecured. There is nothing tangible to reduce the risk a lender makes in offering a student loan. At the end of the day, a lender can’t repossess your education if you don’t repay your loan, but they can repossess the house that was the collateral for a mortgage. So in the end it comes down to the risk associated with making each loan.

  2. thomsoad says:

    How does the Obama proposal affect WF?

  3. Barbara Raus says:

    Alicia — I’m sorry to hear about the loss of your son. If he had any federal student loan debt, that should’ve been discharged upon his death. The Signature Student Loan is a private loan from Sallie Mae. For that, you should refer back to the terms of the credit agreement. If your husband agreed to be equally liable for the loan as a cosigner, then any balance that remains on the loan would be his responsibility. Generally, lenders first seek to secure the remaining balance by filing a claim with the borrower’s estate, if there is one.

  4. Staci Schiller says:

    thomsoad, thanks for your question. At this point it’s too soon to tell because the Obama Administration’s budget recommendations are for 2010. I can tell you that Wells Fargo remains committed to serving the financial needs of students and families through responsible lending of both federal and private loan procuts, and that we’re encouraged by the Administration’s focus on finding new ways to ensure quality education is available to all.

  5. tyler says:

    I was recently granted a $2,500 collegiate student loan from wells fargo. The annual percentage rate of 9.792% before principal repayment begins and 11.746% after principal repayment begins. It says the finance charge is $4,740. The total of payments is then $,7,240. This is almost triple of what the initial loan is. Does Wells Fargo have an abnormally high interest rate or is this pretty common across the board? Also, is there anyway to lower this interest rate? Thanks.

  6. Barbara Raus says:

    tyler — Interest rates on Wells Fargo’s private student loans (like the Wells Fargo Collegiate Loan) are competitive in the industry. Wells Fargo establishes the price based on the credit of the student applicant and/or creditworthy cosigner, where applicable, at the time of credit approval.

    Know that your interest rate is going to fluctuate over time. The interest rate is based on the Prime Rate (which is variable and can change monthly) plus a margin (which is fixed and based on the credit of the student applicant and/or creditworthy cosigner at the time of credit approval). The finance charge and total payments shown on your disclosure statement are calculated as if the interest rate stays the same throughout the life of the loan. However, because the interest rate is variable, you may see the rate change, which could affect the total amount of interest you pay over time. It could be more, or it could be less.

    One option for you to reduce the total interest you pay over time is by paying off the interest that accrues while you are in school. Otherwise, that interest is capitalized (added to the principal balance) when you enter repayment and begins to earn interest of its own.

  7. Susan says:

    When applying for a student loan for my son, is it required to include my husband’s income even though he is not his biological father? My husband insists it isn’t. I’ve been told it is.

  8. Barbara Raus says:

    Hi Susan — There is a great resource page about calculating your Expected Family Contribution at FinAid. Check it out at: http://www.finaid.org/calculators/finaidestimate.phtml

    Specifically look under the “Parent Information” section. You’ll see that if the custodial parent is remarried the stepparent’s financial information is also included.

  9. Matt says:

    I currently have a $30,000 sallie mae signature student loan with a 9% interest rate . I can’t consolidate this loan with others through direct loans because it is not federal. Once repayment begins it will be $350 a month! Is there anything else I can do?

    • Anthony says:

      Matt, If you purchase a condo or house with a 5.75% interest rate you can take out an extra $30K from the mortgage and pay off your 9% loan. You can get a 30 year mortgage and write off the interest and build equity. That’s a life lesson that no one will tell you.

    • Tracey says:

      Can anyone tell us about Wells Fargo, we were referred to them to refi our co-signed Sallie Mae loan which is outrages. Is Wells Fargo good to deal with ?

      • Barbara Raus says:

        Hi Tracey — I know you’re searching for customer feedback, but if you have any specific questions that we can answer about student loans with Wells Fargo, please let us know!

  10. Barbara Raus says:

    Matt — One thing I mentioned in the post that might be helpful for you is private student loan consolidation. Just like consolidating your federal loans , this would be one new loan, with new terms, that’s used to pay off the private student loan(s) you want to include. Because these student loans are based on credit you might be able to qualify for a better interest rate if your situation has changed or if you bring on a cosigner with excellent credit. Consolidation may also extend your repayment term, so you could see a lower monthly payment. However, remember that because you’re taking longer to repay the loan. It could mean more interest over time if you continue to make just the required payments.

  11. James says:

    Hi Barbara,

    I love your blog, btw. I graduated in December of ’08. I only took out Stafford loans throughout college. My grace period ends soon and I am trying to figure out a repayment strategy that will leave me with the most money in my pocket. I am employed (knock on wood), and I have almost 1 year’s salary out in student loans. About one half of my loans are a variable 3.6% and the other half are a fixed 6.8%. Some of the 6.8% loans have various incentives that occur at 12, 24, and 36 months of on-time repayment. What I am thinking is that I will consolidate the variable 3.6% loans to lock in that interest rate, and not consolidate the 6.8% loans, as I would actually lose money by forfeiting my incentives. Then, I plan on paying on my 6.8% loans very aggressively until I have them paid off. I feel that 3.6% is a low enough rate that I could pay on those loans as slowly as possible and begin investing my money conservatively in a Roth IRA so that I could save for a down payment on a house. Is this a sound strategy?

  12. Barbara Raus says:

    Hi James, I’m glad you enjoy the blog! We’re certainly not complete financial advisors, and you might want to speak with one of them about your situation and concerning investment choices. Here’s what I will tell you about your student loans: When you consolidate your new loan has an interest rate that is the weighted average of the loans you include rounded up to the nearest 1/8 of a percent. So when you consolidate you’ll actually see your interest rate rise just a bit. You may want to consider what time you want to consolidate. If you can do so before your grace period ends, you’ll be able to use the 3.61% rate, however if your loans are out of grace when you consolidate they’ll be at 4.21%. Now, remember that your variable rate loans are going to reset on July 1, based on the results of the last 90-day treasury bill auction in May. You can get a general idea of what the rate will be by looking at the most recent 91-day T-bill auction rates — check out my post on May 8, 2008 for more info on doing that. Based on those projections you may be able to lock in a lower rate after July 1. But remember that by then you’ll be out of your grace period then, so the margin you add will be 2.3%, not 1.7% for loans in a grace period. As far as your fixed interest rate loans are concerned, it’s always a good idea to pay down your higher interest rate debt first … even if that means the loan will be paid off before you hit the borrower benefits later in your repayment period. It’s also smart to leave those loans out of a consolidation loan because they are already fixed, so they’d just increase the average interest rate and also would be rounded up, costing you more over the life of the loan. OK, I know that’s a lot to take in, so let me know if you have more questions!

  13. James says:

    Locking in an even lower interest rate would be great. I’d love to see the post you speak of but it appears that your May 8th post is titled “I do (want to save on wedding costs)” and I didn’t see anything about T-bills or interest rates. Also, you say that the variable rate will reset on June 1, but I won’t be able to lock in the lower interest rate until July 1. If the rate resets on June 1, why can’t I consolidate then and lock in the lower interest rate WHILE I’m still in my grace period? Why must I wait until July 1? I think my grace period ends June 20-something (since I graduated December 20-something). My friends and I are anxiously awaiting your reply! Thanks!

  14. Barbara Raus says:

    Hey James — Yikes there was a typo in my comment back to you … thanks for circling back. The rates change July 1, not June 1 (sorry for the confusion – it’s now fixed in my earlier comment). Also, check the May 8 post from last year, not this year. Here’s the address to make it easier: blogs.wellsfargo.com/StudentLoanDown/2008/05/federal_loan_rate_changes
    _1.html

    Let me know if you have more questions.

  15. James says:

    Wow! We’re still waiting on the last treasury auction for May, but based on the second-to-last auction, my interest rate will be 2.488% (which is pretty significant when dealing with $14,000). At least something good came out of this recession! Thanks for your help!

  16. Shay says:

    Hello. I have $100K worth of student loans. I really haven’t paid much on them. I consolidated some them about 2 years ago and the interest rate was over 7% at a fixed rate. Last year, I consolidated all of my loans and got a fix rate at 7% even though the interest rate went down. Is there anyway I can get out of a high fix rate and try to get a lower rate?

  17. Kyle says:

    Hi there, I have about 22k in a self student loan that I would like to refinance (as would my mom since she’s a co-signer) but I’ve tried with both Wells Fargo and BOA and neither is offering locked interest rates at this time on consolidations. Is this the norm across the board right now or are there any places that are offering re-consolidations with a locked interest rate. I was able to refinance my federal loan about 2 years ago and got a 4.625%. My personal is currently at 5% but I’m afraid of it working its way back up. Thanks for any help.

    MODERATOR’S NOTE: This comment was originally submitted June 4, 2009 09:22 AM

    • Barbara Raus says:

      Hey Kyle — are you talking about a SELF loan that’s offered through the Minnesota state government? While you can’t refinance this student loan in the traditional sense like you can with other types of consumer credit, you can consolidate one or more loans (even a consolidation loan) into a new private consolidation loan (as you can’t include SELF loans in a Federal Consolidation Loan). Typically, lenders offer these loans with a variable interest rate. While you might not be able to lock in the rate, you may find you can get better terms on a new loan compared to your current loan (you’ll want to compare the terms of two loans very closely and go with the option that would make the most financial sense for you). It may still benefit you to have a cosigner for the new loan — one may even be required. Adding a cosigner may help qualify for a lower interest rate and improve your chances for getting approved.

  18. James says:

    I need to lower my interest rate; 40% of what I pay each month is just in interest. I try to pay more than minimum payment; it never seems to go down much. My interest rate is at 6%, I didn’t realize it was that high at the time of the loan. I’m in forbearance right now, so I can make smaller payments, but I try to pay more.

    • Barbara Raus says:

      James — there are some options, depending on what type of loan you have. It sounds like you may have a private student loan with a variable interest rate. While you can’t refinance a student loan in the traditional sense, you may be able to consolidate your current loan. Private student loan consolidation allows you to take out a new loan that pays off your old loan. The new loan will have new credit terms, so depending on your situation you may qualify for a better interest rate. Bringing on a cosigner with excellent credit could also help you secure a lower interest rate. Now remember that by consolidating you’re usually extending your repayment term as well, so you’ll be paying more interest over time. If you want to lower what you’re paying in the long run, either on a new consolidation loan or on your current loan, keep doing what you’re doing and pay more than what’s required each month.

  19. kyle says:

    Hi Barbara, the SELF loan I currently have is through Wells Fargo and I have consolidated all my loans once when I got out of school. I now have two loans, the federal loan and the SELF loan. I am looking to refinance the SELF loan just to try and get my mother off the loan. Since my last post I called multiple banks and all of them said that no one offers a locked rate for this loan. My current plan is to wait until after July 1st and then refinance the loan (in hopes that the rates will go down again). Do you know what the rates are supposed to go to as of July 1? Another question that you may not know the answer to, but I need to get a new(er) car and would have to take out an auto loan for it. The fear is, if I don’t refinance the SELF loan before getting the car loan, down the road I won’t be able to refinance the SELF loan because of the additional debt from the auto loan. But I’ve also heard that those types of loans (car, home, student loan, etc.) don’t count against you as much because they are not revolving debt. Is this true? Also, when you refinance (in this case through Wells Fargo) are you able to change your terms (life of the loan repayment) as this could also help in reducing the monthly payments (but obviously extending the life of the loan). Thanks again for your help.

  20. Kyle says:

    Hi Barbara,
    One other question because I think I’ve confused myself. I have a SELF loan that I need to refinance (planning on it after July 1 with the rate change). Does the rate change apply to both Federal loans and SELF loans? Thank you.

    • Barbara Raus says:

      Kyle – OK, now that you’ve added some details about your loan I’m guessing what you’re dealing with is a private student loan (not a SELF loan, which is through the Minnesota government, not Wells Fargo). You’re right that most lenders offer a variable interest rate on a private student consolidation loan – which is what some borrowers use to get a new loan with new terms (since you can’t refinance a private student loan in the traditional sense). Depending on the lender, the rates on variable interest rate private student loans (including private consolidation) may reset monthly or quarterly. These rates are usually priced at a base rate also called the “Index” (like Prime Rate) plus a margin. The terms you qualify for are based on the credit guidelines of the lender. Again, remember that you might still be required to have a cosigner on the loan and if it’s not required having one may help you qualify for better terms. And you’re right that through consolidation you’re usually extending your repayment term, so you might see a lower monthly payment (but that also means you’d pay more interest over the life of the loan if you just paid the minimum amount due each month). As far as how an auto loan may affect your ability to consolidate, it depends on what the lender considers when making the loan decision, for example credit score and debt-to-income ratio.

  21. Jennifer says:

    I was told by a direct loans officer that I had to submit and application to find out what my payment would be for a income contingent loan to qualify me for the teacher forgivness. I submitted only to get the summary, I got it but it didnt have the income contingent figured. Then they requested more information which I did not send because one of my loan holders worked with me to stay with them. Giving me a lower rate. So why would I leave? Direct Loans went ahead and went through with the loan without my knowledge. When I have called them they have been very rude and refused to help me saying they are sorry for the misunderstanding but that I have to stay with them. One of their people said I could call my lenders and see if they would take me back. I called my lenders, they both said they would reverse it if Direct Loans contacted them. A different person at Direct Loans states it can be reversed and submits me to the research dept to get me a direct case manager. That person calls me and says that she doesn’t feel it necessary and won’t submit a request for me or do it. Not that she can’t but she won’t. I then get a customer service represenative that lies to me and says she can’t help then hangs up on me. What am I supposed to do? From the beginning of checking with them for information they have tricked and lied to me, then signed me up without me knowing that is what was happening and now refuse to help me. Saying it is my problem. Please help as to what I should do. Who I should contact, what can be done?

  22. Barbara Raus says:

    Jennifer — You can contact the Federal Student Aid Ombudsman of the Department of Education. Their website is http://www.ombudsman.ed.gov/. They may be able to help you sort out what has happened with your loans and how you can proceed.

  23. Ms. Orlando says:

    I have a questions I’m trying clear up I had a student loan for $1,500.00 over 15 years ago and now its $20,000.00 they had the wrong informaiton on the claim so It never came up when I filed my taxes. I filed bankrup 10 years ago and I’m not sure if it was on there or not. I want to attend school again and repay the loan. But will they dismiss the intrest if I pay the base amount.
    Help.. Ms. Orlando

    • Barbara Raus says:

      Ms. Orlando, generally student loans aren’t dischargeable when you file bankruptcy. Your loan (not sure whether you’re dealing with a federal student loan or private student loan) likely went into default if you weren’t making payments on the loan. Your lender should have been in contact with you once your loan went into the repayment period so you could begin making payments. . You’ll need to find out where your loan stands now with the lender and work with them to arrange payments. If you’re dealing with a federal student loan you may be able to rehabilitate your loan to get it out of a default status. But you’ll still be responsible for the total amount you borrowed, plus interest.

  24. Trying To Become Debt Free says:

    Hi — I have a WellsFargo Consoldiated Studnet Loan
    I owe 30k — Interest is 16k — Principal is 14k. Can I simply pay the 14k and become debt free?

    Thanks, Mike

    • Barbara Raus says:

      Mike, when you took out the loan you agreed to pay the money back, plus interest, so you can’t just pay the principal amount. The interest is the cost of borrowing and the promissory note that you signed detailed the full terms of your loan including interest accrual and the variable interest rate. . If you’re looking for options to payoff the loan a little faster, you may want to pay a little more than is required each month. That will reduce the total amount of interest you pay over the life of your loan.

  25. Susan says:

    How do people get these low interest rate? My son is a full time student and has student loans through Sallie Mae at 13%! Is there any thing we can do to get a lower interest rate?

    • Barbara Raus says:

      Susan, if your son has a private student loan the interest rate is based on the credit guidelines of the lender. Does he have a cosigner on his loan? A cosigner with excellent credit may help him qualify for better terms. Because you can’t refinance student loans in the traditional sense, your son may be able to get a new loan with potentially better terms by consolidating his private student loan. Essentially this is taking out a new loan, which pays off the old one.

  26. Tim says:

    I currently have a large amount of private student loan debt at a variable rate (3mo Libor + %). Accordingly, my current rate is around 4.5%. I am paying double and triple each month but was wondering if it is possible to refinance the debt at a fixed rate of interest. I would be willing to refinance for a fixed rate somewhere in the neighborhood of 6%. Does anyone provide this service?

    • Barbara Raus says:

      Tim — When it comes to private student loans, since you can’t refinance in the traditional sense, your option to get different terms is to consolidate through a private consolidation loan (essentially paying off the old loans with a new loan with new terms). Most lenders (including Wells Fargo) offer these with a variable interest rate.

  27. Anonymous says:

    do you have cost of living loans

    • Barbara Raus says:

      Wells Fargo offers federal and private student loans that can be used to cover educational expenses related to attendance at the school. Generally the cost of living is included in your total cost of attendance, which is calculated by your school and used to determine your financial aid package at the school. If the scholarships, grants and federal student loans in your financial aid package aren’t enough to cover your living expenses, you could choose a private student loan to cover the gap between your aid and the cost of attendance.

  28. John says:

    Hello,

    I am completing my Master’s right now and have a little over $30,000 in federal students loan, one of which is unsubsidized. Can I consolidate these loans so they are not at a 6.8% interest rate?

    • Barbara Raus says:

      Hey John – If your loans are already at the 6.8% fixed interest rate, consolidating isn’t going to get you a lower interest rate, which is what I’m guessing you’re looking for. You would actually end up with a higher interest rate as the interest rate on a Federal Consolidation Loan is the weighted average of the loans you include rounded up to the nearest 1/8 of a percent. However, if you have other federal student loans that aren’t already at a fixed interest rate and you decide to consolidate, you may see some benefit. Check out this calculator: http://www.finaid.org/calculators/loanconsolidation.phtml

      You could use another type of consumer credit to pay off the loans, but you’d be losing the benefits of the federal student loan – like deferment options, possible tax benefits, etc. Plus you wouldn’t necessarily be guaranteed a lower interest rate on a different loan.

  29. Tom says:

    Hello, I’m in a similar situation as Tim, variable rate private student loan. Though my monthly payments are low now, once libor goes back up, I know my payments will increase with it. Is there anyone that offers private consolidation loan at a fixed rate?

    • Barbara Raus says:

      Tom – I’m not aware of a lender that offers a private student consolidation loan at a fixed interest rate right now. The ones I know of (including Wells Fargo’s option) are a variable interest rate loan. Have you considered using another fixed-interest rate consumer loan (for example, a fixed-interest rate home equity loan) to pay off your student loan debt? If that’s not an option, you could consider paying a bit more than required (if you can swing it) while the rate is lower to knock off some extra principal. Then if your rate does rise, you’ll be accruing a little less interest.

  30. Kiraney says:

    I have about a whopping $90,000 in student loans that are Federal loans and a wells fargo loan with interest rates ranging from 2.3% up to 7.5%, and I am looking into consolidating and applying for the new income based payment option and the public service loan forgiveness program (I’m a public school teacher), but I’m having trouble trying to figure out what will be the best option for me as far as consolidating. It sounds like consolidating won’t make a difference other than to turn everything into one payment, and potentially lower payments in exchange for extending the term of my repayment. I am also wondering if this has an impact on what my monthly payments will be under the Income Based Payment plan, because it seems like if I don’t consolidate all of my loans into one, then each individual loan will be maxed out at 15% of my monthly income, rather than having the total of the loans together be no more than 15% of my income. Any ideas? I am currently paying $1000 a month in loans and I am only getting paid $2300!!!

    • Barbara Raus says:

      Hey Kiraney, Here are a couple things to consider:

      Consolidation – if you’re dealing with variable interest rate federal Stafford loans (those made before July 1, 2006) consolidation may be of interest to lock in an interest rate. A consolidation loan has and interest rate that is the weighted average of the loans you include, rounded up to the nearest 1/8 of a percent. The variable interest rate Stafford loans change each July 1, and are currently at historic lows, so you may want to consolidate to lock in a low rate. You’re right that it may also give you a lower payment by extending your repayment term.

      Public Service Loan Forgiveness – This is available only for people with student loans from the Direct Loan program. You would need to consolidate any federal loans that were made through a private lender into the Direct Loan program for them to qualify for Public Service Loan Forgiveness. If you already have Direct Loans, the payments you’ve been making may count toward this forgiveness.

      Income Based Repayment – Under IBR your total payments would be capped at 15% of the difference between your adjusted gross income and 150% of the poverty line for your family size in your state. When you apply for this repayment, you need to tell your lender(s) about any qualifying federal student loan debt you have that’s not with them. So the payment amount is based on your total eligible federal student loan debt, not just the one loan.

      Is your Wells Fargo loan a federal loan or a private loan? You can’t include a private student loan in a federal consolidation loan. However, if you’re interested in consolidating a private student loan there is a private student loan consolidation option through Wells Fargo. Unlike federal consolidation, you don’t lock in your interest rate, but you would be extending the repayment term which may lower your monthly payment (keep in mind that that could mean paying more interest over time). Plus if your credit situation has changed or you bring on a cosigner with excellent credit you may be able to qualify for better terms on a new loan.

      OK, now that you’ve got a bit more information let me know if you have additional questions.

  31. CP says:

    Thanks for the great information. It has taken me years to get through school and I am facing a huge debt. I think I can handle 10 years of public service to help get those debts down, thank heavens for that. I hope that doesn’t go away! It’s good to know that there are others in my situation. It doesn’t seem right, but you know, the bank can’t get back what I learned!

  32. Quick Question says:

    Haven’t had time to read through all these comments which I assume are very helpful but… here’s my situation.

    Student Loans:

    Private/Variable: 7000 @ 3.5%
    Stafford/Fixed: 10,000 @ 6.8%
    Consolidated/Fixed: 6000 @ 4.75%

    Can I get any of those interest rates reduced or consolidated. I pay about $600/month on these because I just want to get them out of the way. I have been doing research as far as consolidating goes but I’ve been going in circles trying to find a good answer.

    What are you suggestions as far as reducing interest rates, paying off, etc. Thanks.

    • Barbara Raus says:

      Quick Question – It looks like you’ve already consolidated any variable interest rate federal loans, which would be the first recommendation. Since your other Stafford loans are already at a fixed rate it doesn’t make sense to consolidate them if you are able to afford your monthly obligation. By consolidating the existing Stafford and previously consolidated loans your interest rate would actually go up a bit as the interest rate on a Federal Consolidation loan is an average of the loans you include rounded up to the nearest 1/8 of a percent. The only real reason to consolidate those would be if you needed to extend the loan term and possibly reduce your monthly payment, which it sounds like you’re doing OK with right now.

      There really aren’t options to consolidate private student loans at a fixed interest rate. However, if you did consolidate you may get better terms than you currently have on your private student loans. It just depends if you credit situation has changed or if you brought on a cosigner with good credit. Your rate doesn’t look too bad right now, but since it’s variable that may change, so you’ll want to watch it closely.

      If you’re paying extra toward your loans, which it sounds like you are, have you considered which loan you want to pay off first? Be sure to consider the interest rates (especially that the private one may change) and the repayment options you have on each loan when you’re making a repayment plan. Set a plan that makes the most financial sense for you.

  33. Jennifer says:

    I have about 10,000 in student loan debt through Fed. Direct Loans. I have a fixed rate of 8% which is high compared to current rates. All of my loan were consolidated years ago. What can I do to get a lower rate. What is a good going rate right now from private lenders?

    • Barbara Raus says:

      Jennifer – once you’ve consolidated federal student loans, your interest rate is locked in for the life of the loan. So unless you choose to use some other type of consumer loan (personal, home equity, etc., depending on assets) to pay off the student loan, you don’t have options to change your interest rate.

      Like I said in the post, though, that option should be considered very carefully since you would lose several benefits of student loans like deferment and forbearance options, plus the potential tax deduction.

  34. Mark says:

    Barbara, I graduated last year and have two private loans with variable interest rate:
    1. $21,000 @ 3.25% and
    2. $14,000 @ 2.25%
    I am currently paying down other Stafford loans at 6.8% as fast as I can and my goal is to reduce and lock-in as low an interest rate as possible on the above two loans before the interest rates rise.
    1. What would you recommend could be my options? Can I refinance through Wells Fargo? I have excellent credit history and am a long time Wachovia customer.
    2. If the Fed key interest rate is 0% why is mine not close to it?
    Thanks!! I love your blog!

    • Barbara Raus says:

      Hi Mark – You can consolidate your private student loans with a Wells Fargo Private Consolidation loan. However, you’re talking about locking in an interest rate for your private student loans, and most private consolidation loans out there are also variable interest rate loans. Now, you may still be able to get better terms than you have now if your credit situation has changed or if you bring on a cosigner with good credit, but you wouldn’t lock in your interest rate. Given that, you may want to consider which order you’re paying down you debt to make sure it will make the most financial sense in the long run. If the index rate on which your private student loans are based begins to rise you could see a rate above your current 6.8% on your federal Stafford loans. Plus, consider that your federal loans most likely have a few more repayment and deferment/forbearance options than those of most private student loans. As far as your interest rate is concerned, keep in mind that your rate is an index (like Prime Rate or LIBOR) plus a margin, so you’ll want to refer to your promissory note to see what that margin is on your loan.

  35. Courtney says:

    Hi Barbara,

    Thank goodness for you! I love your advice. I have 56k in student loans, all but one fixed at 6.8%. One is 8.2% and is around 3k. I looked at consolidating into a direct federal loan in order to take advantage of the public loan forgiveness option, but at my current salary (45k), my monthly payments will still be pretty high under the IBR program (about $400). If my salary rises over the next few years, I’ll be paying about the same as I will under the traditional plan, which is a monthly payment of $650 for 10 years. I’m starting to think that I should just stay with the traditional plan and pay the loans off as soon as possible to save on interest.

    All but $150 or so of my $650 monthly payment goes towards interest. I can afford to pay about $650 – $675 per month towards my loans. If I accept the extended payment option (spreading the payments out over 25 years), my required monthly payment is reduced to $350, all of which goes towards interest. Here’s my question: If I accept the extended payment plan, can I still elect to voluntarily pay another $300 a month and direct that extra money towards paying the principle of the loans? Or, do I have to use that extra $300 towards the interest? I’ve never understood this point. Am I required to pay off the interest first before I can begin paying the principle? Thank you so much for your response!
    -Courtney

    • Barbara Raus says:

      Hey Courtney – Here’s a quick explanation of how simple interest works. The annual interest rate is divided by 365 to get the daily rate. The daily rate is then multiplied by the current principal balance to get the amount of interest that accrues per day. This interest is kept in a separate account from the principal, and interest does not accrue on the balance of that account, unless it is capitalized. Any additional payment you make would first go to the outstanding interest, and once that’s paid off would start going to your principal balance. So no matter what your monthly payment is, the amount of interest your loan accrues will be the same. Therefore if you are able to stay on the standard repayment schedule, it’s in your best interest to do so.

      Let’s look at the numbers (they’re a little different than what you were thinking, so you might want to double check your information). I’m using a loan balance of $53,000.00, interest rate fixed at 6.8% and term of 120 months. This assumes that your payments are received on the payment due date each month; otherwise, there is extra interest to account for. A $53,000.00 loan at 6.8% for 10 years has a monthly payment of about $609.93. Of this payment amount, roughly $296 will go straight to interest.

      Here’s the calculation for your first month’s interest:
      Monthly interest ($53,000.00 X 6.80% / 365 X 30 = $296.22)

      Now, we subtract the interest from your $609.93 payment and $313.71 will go toward principal
      So, $53,000.00 (principal balance) – $313.71 (principal payment) = $52686.29 (new principal balance)

      During the second month, your interest is accruing off of $52,686.29 rather than the $53,000.00
      Monthly interest ($52,686.29 X 6.80% / 365 X 30 = $294.47)

      That means a bit more of your payment will go toward principal.
      $52,686.29 (principal balance) – $315.46 (principal payment) = $52,370.83 (new principal balance)

      And the amount you’ll be putting toward principal will get a bit higher each month you are in repayment. Now that you’re probably on information overload, do you have additional questions?

  36. Frustrated says:

    Hi Barbara, thanks for the info you’ve provided everyone. I have consolidated school loans of $150,000 @6.7% what can I do to lower my payments? its seems like whatever company I go to will not reduce the interest rate, seems like I have no options – Thanks for any help you can provide

    • Barbara Raus says:

      Frustrated, is your loan a Federal Consolidation Loan with a fixed interest rate? If so, when you consolidated, you locked in your interest rate. So you’re right that there aren’t options to have that interest rate reduced with the current loan.

      Now, as I mentioned in the post you could consider using a different consumer loan (personal, home equity, etc., depending on assets) to pay off your student loan, however you’d need to consider the options you’d be losing.

      Are you looking to pay less interest or do you need payment relief? If you’re having trouble making your payment you could consider a deferment or forbearance if you’re eligible. Or have you looked into Income-Based Repayment? Check out info on IBR here: http://blogs.wellsfargo.com/StudentLoanDown/2009/07/the_scoop_on_income_based_repa.html

      • Anonymous says:

        Hi Barbara,
        yes its consolidated with a fixed rate. I’m looking to reduce interest payment. currently paying $1500 a month, was just furloughed at work so…. will check out blog, thanks

    • answer says:

      if you spent $150,000 on college you must be making 100,000 or more after you graduate. Just pay it off in cash.

      • Barbara Raus says:

        answer — Thanks for commenting. Depending on field of study, school choice, and eventual job borrowers might not be in a situation to simply pay off their debt right away. Just because an education costs a certain amount doesn’t guarantee a certain salary after graduation.

  37. Rena says:

    Hi Barbara,

    Total I owe about $180,000. $68,000 is with American Educational Service, consolidated at 5.6%. The rate is high enough that 75% of my monthly payment is currently going to interest. I have one small federal loan that I still have not consolidated (it’s at 4%). Would I be able to re-consolidate the AES loan with my small loan to obtain a lower interest rate? In the alternative, do you know of private consolidators who could give me less than 5.6%? My fear is that no private companies are consolidating for a low rate at the moment. Thanks a lot~

    • Barbara Raus says:

      Hi Rena – You would be able to consolidate your federal consolidation loan with your federal loan that hasn’t been consolidated. However, this wouldn’t get you a lower rate. In fact, your rate would go up a bit since the Federal Consolidation loan’s interest rate is the weighted average of all the loans included rounded up to the nearest 1/8 of a percent. Consolidating your federal student loans into a private student loan generally is not a good idea. If you switch your student loans from federal to private, you’ll lose the protections you have with your federal student loans. You’ll also almost certainly be swapping a fixed interest rate for a variable interest rate. And in today’s credit environment, it is unlikely you’ll find a private lender who can give you an interest rate lower than 5.6%.
      You can check out the interest rates on the Wells Fargo Private Consolidation Loan here: http://wfefs.wellsfargo.com/jump/rates.html#priv_consol. Since the loan is based on credit it’s a good idea to apply with a cosigner who has good credit. That may help you secure a lower interest rate than if you’d applied without a cosigner.
      The best way to reduce the amount you pay in interest each month is – if you’re able – to pay more than the monthly payment amount and have the balance applied to principal.

  38. Randi says:

    I currently have a private student loan that is consolidated with Sallie Mae. My interest rate is currently 8% and most of my monthly payment is going towards interest. I do pay more than the minimum per month but I will end up paying more than double my actual loan. I want to reduce the interest. Can I consolidate again through another lender or possibly ask for a lower rate since I pay ontime or add a cosigner. Once again my loan is already consolidated but i want a lower rate.

    • Barbara Raus says:

      Hi Randi – First off, it’s great that you’re paying more than is required toward your loan; that will really help you in the long run. You can reconsolidate with another lender. Here’s an idea of the rates on the Wells Fargo Private Consolidation Loan: http://wfefs.wellsfargo.com/jump/rates.html#priv_consol. Like I told Rena who commented right before you, it’s a good idea to apply with a cosigner who has good credit if you are hoping to secure a lower interest rate. As for options with your current lender, they’re probably limited, but it won’t hurt to ask!

  39. Sasha says:

    Hi,

    I graduated college 2 years ago with private loans from Sallie Mae totaling around 120K. I consolidated them with citibank after I graduated with an interest rate of 10.8%. I have no cosigner at the moment. Is there any option for reducing the interest rate of the loan (I’ve already used all the benefits such as automatic debit).

    Is it possible to transfer this student loan to another lender or reduce my interest rate by adding a cosigner and renegotiating my terms?

    Please advise.

    • Barbara Raus says:

      Sasha – You could consider reconsolidating your private student loan with a different lender. Like I’ve told other recent commenters, applying with a cosigner who has good credit may help you secure a lower interest rate than if you’d applied without a cosigner. You can find out more information about Wells Fargo’s private consolidation option at: https://www.wellsfargo.com/student/repay/private_consolidation. You’d have to check with your current lender about any options for changing your current loan with them.

  40. Joe says:

    Hi Barbara, Im going to try to make this long story short. I have student loans at interest rate X, and my lender (I guess it was around june 2006) sent me paperwork to lock it in at rate Y, which was lower than X. I did so, and sent it back. Well “they never recieved them.” Im currently living abroad and intend to make this country my permanent residence. Therefore, they have absolutely no way of getting money out of me. I dont want to be a bum and back out of my contract, but want a lower interest rate. Any advice?

  41. Barbara Raus says:

    Hey Joe – Well, you certainly don’t want to be a bum! There would be some hefty consequences waiting for you if you ever decided to come back to the U.S. Are you talking about federal loans or private loans? If you’re dealing with federal loans, you may be able to lock in an interest rate. It wouldn’t be lower as federal consolidation loans have an interest rate that is the weighted average of those you include rounded up to the nearest 1/8 of a percent. But if you have variable interest rate loans (made before July 1, 2006) it would ensure that those interest rates don’t increase in the future. Federal consolidation loans are offered directly through the Department of Education (http://www.loanconsolidation.ed.gov/).

    Private student loans are a different ballgame. You could consider consolidating those. If your credit situation has changed or if you bring on a cosigner with good credit you may be able to secure a lower interest rate than you have now. Of course, you’ll want to consider the terms of the loan carefully to make the decision that’s best financially. Private consolidation loans are offered by private lenders like Wells Fargo (https://www.wellsfargo.com/student/repay/private_consolidation).

    If you’re wanting to lower the total amount of interest you pay, whether it’s on a federal loan or a private loan, the best way it to pay more than you’re required to pay each month. You could also check with your lender to see if your lender offers a discount for making automatic payments on your loan.

  42. Paul says:

    I have consolidated all of my private loans with Sallie Mae at 7%. The loans were from 2002-2006. I consolidated them not during my grace period. It is for 35,000, with 13,000 unsubsidized. However, I am currently in deferment for my loans because I am in school. I want to know if I should reconsolidate with another lender, and if I can even reconsolidate with the government? Where can I find the information for the government loans if I do in fact qualify? Also, do my deferment periods have a limit on how long they can go for or will they continue for as long as I am in school?

    • Barbara Raus says:

      Paul – First off, I want to clarify that if you’re talking about having subsidized and unsubsidized (types of Stafford Loans), you’re dealing with a federal student loans that were made by a private lender, not private student loans. Now, there are three scenarios where a borrower who’s already consolidated federal student loans can reconsolidate: [1] if they include at least one other federal loan into the new consolidation loan, [2] if the loan is in default status or has been submitted to a guaranty agency for default aversion by the loan holder, or [3] if they intend to apply for loan forgiveness under the Public Service Loan Forgiveness Program. Most private lenders have stopped making federal consolidation loans, so if you fall into one of these groups, your best option is through the Direct Loan program. Check out details here: http://www.loanconsolidation.ed.gov/index.html. For federal loans an in-school deferment will last as long as you are enrolled at least half time.

  43. Esther says:

    I regret ever taking out a loan through Wells Fargo. Due to economic hardship I am a month behind on all my loans. Wells Fargo is calling me nonstop. I’m paying my loan late each month, but at least I’m paying. When I spoke with a representative I was told that they wouldn’t do anything to help me until I pay them $200. One of my other lenders was perfectly happy to lower my monthly payments.

    • Barbara Raus says:

      Hi Esther – I’m sorry to hear you haven’t had a good experience with us. Would you contact us through the Ask the Expert tool (link on the right side) with a few more details so we can look into your account?

  44. JustFlatBroke says:

    I got a student loan with WF (principal 14k) in 2004 and I am still in school. I did some checking on my account and noticed that the amount due reaching $30,000 meaning over $10,000 in interest charges. That works out to about 2k a year added in interest charges over the past 5 years. I have loans with other companies from the same time frame and the interest accrued is much, much less (barely 2,000 total). Is there a way I can work out a payment plan that allows me to pay obviously the principal and just some of that outlandish interest accrued on the loan?

    • Barbara Raus says:

      Hi there — Each of your student loans has its own set of terms, so the amount of interest they accrue will depend on the different interest rates, whether they’re federal or private student loans and if they’re federal student loans if the interest is subsidized. So some borrowers with multiple student loans will see a difference in each individual loan. Please refer to the terms and conditions of your promissory note as it contains the cost of borrowing and your repayment options and obligations The best way to reduce the amount of interest you pay is by paying a little more toward your principal balance as you are able – remember that payments are first applied to late charges, other charges and accrued interest before being applied to principal. With a lower principal balance, you won’t be accruing as much interest.

  45. Jon says:

    Hello,

    I have two stafford unsubsidized student loans with Wells Fargo and I currently work for the Federal Government. I saw that if one works for the federal government for 10 years while paying on their student loans for those 10 years, the remaining balance will be forgiven through the Federal Student Loan Repayment Program. My problem is about the same time I hit 10 years with the government my student loans will be paid off. Is there anyway to extend my Student loan terms in order to take advantage of this?

    Thank you,

    Jon

    • Barbara Raus says:

      Jon — One thing to note is that the Federal Student Loan Repayment Program does not forgive the debt, but permits agencies to repay federally insured student loans as a recruitment or retention incentive for candidates or current employees of the agency. For the types of loans that can be paid off the terms (including your repayment period) are set for the life of the loan. There may be options to postpone under specific circumstances through a deferment (https://www.wellsfargo.com/student/repay/deferment/), but the only way your repayment period would change is if you consolidated your loans. That would mean taking out a new loan with new terms to pay off the other loans, which may give you a longer repayment term. One thing you’ll want to consider, though, is that this does mean you’ll pay more interest over time and if you didn’t end up qualifying for the Federal Student Loan Repayment Program, that extra cost would be your responsibility.

  46. Valor says:

    I have 2 private student loans with wells fargo. Both come out to about 10,000 dollars. One has a rate of 6.55%, and the other 5.88%. Now I am making payments every month but maybe only 60-70% is going to the principle. Wells Fargo is taking out almost 30-40% in interest. Why is this so high? I believe my parents payed interest on the loans while I was still in school. I have been paying for a year and at this rate it’ll take me forever to pay it off and I’ll prolly repay the loan twice. How can I lower my monthly payments, and is paying the 2 loans off in one lump sum better than making monthly payments? This may be possible for me in a few months time. I just want to get these out of the way and start saving for the future.

    • Barbara Raus says:

      Valor – As you continue to make your regularly scheduled payments you’ll be paying down the principal and will see a smaller part of your regular payment going toward interest. If you want to reduce the amount of interest you are paying you could consider paying off part of the principal balance that’s accruing the interest (keep in mind that any payment would first be applied to outstanding fees or interest on the loan). It sounds like you may be able to do that since you mentioned a lump sum. There isn’t any prepayment penalty on student loans, so if you are able to pay down the principal balance it’s a good idea to reduce the amount of interest you’ll pay over the life of your loan.

  47. emma says:

    hi,

    i graduated from law school in 2005 and got a big firm job in structured finance out of law school. when the economy went to crap, i lost my job and have had to forbear my private loan payments – my loan is with my school – for over a year (I am on a ten year repayment schedule…my loan program didn’t extend the schedule for the amount of time that i went into forbearance, i still have to pay them back in the same amount of time). now my monthly payments are a lot higher and i can barely afford them. how can i get my payments lower and extend them over a longer time period? will another loan program buy them from my school? i have excellent credit, by the way. help!!!

    • Barbara Raus says:

      emma – If your loan is a private student loan (one that’s not guaranteed by the government), have you considered private student loan consolidation? You’d be taking out a new loan to pay off your previous loan and the new loan could have a longer repayment term. By taking longer to pay the loan, you may be paying more interest over time, however stretching out the repayment term may help lower your monthly required payment. Many lenders (including Wells Fargo) offer private consolidation loans.

  48. Unsure about what to do says:

    I had financed my Graduate degree to a tune of slightly over $40,000 at 6.8% interest through the government via my grad school’s financial service; Edfinancial. What they did was issue me a separate loan every quarter. I am interested in consolidating this with a current $3,000 loan I have with Federal Direct loan. Will this be considered one loan consolidation, or multiple? Will my current Federal loan go up in interest through this consolidation, or will the 6.8% go down?

    • Barbara Raus says:

      Unsure – If you are looking to consolidate your federal student loans through the Direct Loan program what will happen is that a new loan will be taken out to pay off each of the loans you want to consolidate. That new loan’s interest rate will be the weighted average of the loans you include rounded up to the nearest 1/8 of a percent. So if all your loans have an interest rate of 6.8%, by consolidating you’ll actually see your interest rate rise a bit. You can get more information at: http://www.loanconsolidation.ed.gov/

  49. Dave says:

    I see that you have given some good advice, and I hope that you can help me out as well. I graduated with a bachelor’s in Industrial Engineering in May 2009. I am currently working as a mechanic, and simply put, I do not make enough money to get by. I can no longer defer my student loans, and most of them are in repayment. I have 5,000 in federal loans, 40,000 in Wells Fargo Education Connection loans, and 75,000 in Sallie Mae Signature Student Loans. I am still trying to find an engineering job, but I am having little luck. I have been researching the student loan repayment program offered by the military, but I noticed that private loans are not eligible. I read on a blog that someone had private loans through sallie mae that he said qualified. Have you ever dealt with this SLRP program before, or have any other suggestions? Thanks!

    • Barbara Raus says:

      Dave – The student loan repayment program through the military does not apply to private student loans. With private student loans there aren’t as many options for repayment. You could consider consolidating your private student loan debt. Many lenders (including Wells Fargo) offer private consolidation loans. By consolidating you may be able to extend your repayment period which could lower your monthly payments. Also, if your credit situation has improved or if you brought on a cosigner with good credit you might be able to secure a better interest rate than you have now.

  50. shelly says:

    I think it is an absolute disgrace that the Obama administration would bailout banks for bad behavior but not make it mandatory for the student loan industry to lower all interest rates for struggling grads. i don’t care what promissory notes were signed.

  51. Freddy says:

    What is consider a low interest rate for student loans in Arizona especially this times of recesion,???

    • Barbara Raus says:

      Freddy – I’m guessing you’re talking about private student loan interest rates (Federal student loans have fixed interest rates that are set by the government). For private student loans your rate will depend on your credit (and your cosigner’s credit if you have one). You’ll have to check with specific lenders to see what kind of interest rate range is possible with their student loans.

  52. Jewels says:

    Hi Barbara! I have two private loans through Great Lakes Organization. One is about 20K and the other is about 10K. The interest rate is about 6.8% for both and I have to consolidate the two loans. The site is telling me to complete, print, and sign a Federal Consolidation loan through the Federal Family Education Loan Program (FFELP). Is there anything I should look out for or any other options I should explore? Thanks!!

    • Barbara Raus says:

      Jewels – it sounds like what you have are two federal student loans that are part of the Federal Family Education Loan Program. Based on the rate you quoted they may be Federal Stafford Loans. This type of loan made after July 2006 has a fixed interest rate of 6.8%. Now here are a couple things to think about. Great Lakes does offer federal consolidation, however since you have fixed interest rate loans really think about the reasons you want to consolidate. If your interest rates are fixed, you wouldn’t benefit from locking in an interest rate through consolidation. Actually, your interest rate might rise, since a Federal Consolidation Loan has an interest rate that’s the average rate of the loans you include rounded up to the nearest 1/8 of a percent. If you are trying to make repayment simpler with just one loan, you could see if Great Lakes offers combined billing so your loan statements come together and require just one total payment. If you’re looking to extend your repayment term and possibly lower your payments, you might want to first look into extended repayment (available for borrowers with FEELP loans that total $30,000, and it sounds like you might). And lastly, if you’re looking to consolidate in order to qualify for public service loan forgiveness, that is only available through Direct Loans: http://www.loanconsolidation.ed.gov/.

  53. Stephanie says:

    I graduated from college in 1995 and consolidated my student loans thru Sallie Mae at 9%. At this point I still owe over $35K. Is there a way to refinance or lower the interest rate if my loans are already consolidated?

    • Barbara Raus says:

      Stephanie – If you’re talking about a federal consolidation loan, you don’t have many options to get a lower interest rate. You could consider using some type of consumer credit to pay off your loan, however you would need to consider that you’d be losing the benefits of the federal student loan – like deferment options, possible tax benefits, etc. And remember that a lower interest rate on a different loan isn’t guaranteed. Are you able to pay down some of the principal balance of your loan? That would help you reduce the overall time to pay off your loan as well as the total interest you’d pay. If you’re in a public service career, you might be able to reconsolidate into the federal Direct Loan program and quality for loan forgiveness. Check out the Department of Education’s website (www.dl.ed.gov) and search for Public Service Loan Forgiveness Program.

  54. joe says:

    I have private student loans that total 120000, the payment is right now 1300 a month, I cant make the payments is there anything that I can do?

    • Barbara Raus says:

      joe – Talk with your lender about your options asap. If your loans are with Wells Fargo, give us a call at 1-800-658-3567. You may be able to postpone your payments through a forbearance. You could also consider consolidating your private student loans. That may extend your repayment term making your monthly obligation a little less, however you may end up paying more in interest over the life of the loan. Plus if you apply with a cosigner with good credit you may qualify for better terms than you currently have.

  55. Anna says:

    Hi,

    I have a Sallie Mae private loan that I got a couple years ago. I was young, and didn’t understand the rates very well, and was just excited to get the loan, so I signed a $21,000 loan for 13.125% interest rate, and a $10,000 loan for a 11.25% interest rate. These loans have accumulated an insane amount of interest. I am still in school, and keep seeing the interest on them grow and grow and grow. Is there anything I can do to get the interest rate to go down. I am so afraid that once I get out of school, I will never be able to afford these. The $21,000 loan is already up to $13,000 in accrued interest! Please help!

    Thanks

    • Barbara Raus says:

      Anna – You could use a private consolidation loan while you are in school to combine the private student loans you have into one loan with new terms. If you bring on a cosigner who has good credit you may be able to qualify for a lower interest rate. Remember that through consolidation you may be extending your repayment term, so compare the interest you’d be paying in each scenario. Also keep in mind that student loans don’t have a prepayment penalty, so you can pay extra toward a new loan or those you have currently to reduce the interest you’ll pay in the long run.

  56. Holly says:

    So happy I found this site! Okay

    we currently owe 120k in student loans and nothing is consulidated.

    17663 2.48% federal/variable

    14,342.43 6.8 fed/fixed

    16,018.55 5.25/private/vari
    19,165.11 6.25 /private vari

    then the rest at city bank
    at 49 k

    We have 19,000 we want to completely knock out 1 loan:

    I have the 2 loans at Sallie Mae with 5.25% and 6.25% I don’t know much about loans…is there hope that I can consulidate these 2 loans at a lower interest rate?

    I’m assumming the federal loan is going to stay at 6.8 no matter what…which loan do we pay off first? The big federal one or the one with sally mae? Let me know what you think!! Thanks!

    • Barbara Raus says:

      Holly – We’re glad you found us, too! OK, here are some things to think about as you decide which loan you want to pay off first. You are right that your federal loan at 6.8% is fixed and there aren’t really options to lower that rate. Remember, though, that even though that loan has the highest interest rate right now it also won’t get higher. The others could as the interest rates are based on an index that changes. Also, think about the benefits of a federal loan like deferment options, additional repayment options, etc.

      You mentioned consolidating your private student loans. This is an option you could look at to possibly get better terms. The interest rate you get on a private student consolidation loan isn’t based on the loans you’re including but is based on your current credit situation. If you were able to apply with a cosigner who has good credit you may find you qualify for better terms.

      What you may want to do is use a repayment calculator like this one: https://www.wellsfargo.com/student/planning/calculators/alternative to calculate the total interest you’d be repaying with each option you’re considering.

      On a separate note, you may want to think about consolidating your unconsolidated federal student loans that are currently at a variable rate. By doing this you’d see a slight increase in your interest rate (the federal consolidation loan has an interest rate that’s the weighted average of the loans you include rounded up to the nearest 1/8 of a percent), but you’d be able to lock in a fixed rate at a historic low. Something to think about since that loan’s interest rate may increase over time.

  57. Tiffany says:

    Barbara–I have three loans, two of them federal and one a private student loan through Wachovia (about 20k). I am active duty military and part of my contract is that the military is going to repay my school loans. Both of my other loan companies willingly granted me a military forbearance until the military can get all the paperwork done and start making payments (up to 3 years from now). However, Wachovia has refused to offer any such help. My loan is currently in hardship forbearance since I was unemployed before starting with the army. However, that forbearance will be up in a couple months and they want me to start making payments. Obviously it does not make sense for me to make payments on a loan that the military will be paying off in full in the next year or so. I’ve talked to them countless times and I just don’t know what else to do. Any ideas? Please help!

    • Barbara Raus says:

      Tiffany – Because you’re dealing with two different types of loans, federal and private, the options are going to be a bit different. Would you email us through the Ask the Expert function (there’s a link on the right hand side of the page) with a few more details about yourself and some contact information so we better understand your situation and find a solution that works for you?

  58. Anonymous says:

    If i already have a student loan through wells fargo but I need another one.. can I just add money onto the loan i already have or do i need to apply for another one?

    • Barbara Raus says:

      Anonymous – If you need funds in addition to what you’ve already received, you’ll need to apply for another loan. A student loan representative will be able to walk you through your options if you call 1-877-412-5321.

  59. Holly says:

    Thank you! Couple more questions:

    1. Is it true that although we could consulidate all the private loans at City Bank (currently at variable 3.6) that we can never “fix” these rates? If thats the case, is it better just to leave them all there since we can afford the payments?

    2. I LOVE the idea of locking in the 17,000 at 2.5, but if we consulidate all the federal loans with government, it would average out to about 34,000 @4.5 %FIXED, since the other 67 G isn’t fixed, should we pay those first and go after the “locked” Federal at the end?

    3. My initial idea was to go after the 6.8 ones and just pay interest on the city bank for a year. Is this dumb, since the city bank are not fixed?

    Thanks again. My husband and I plan to send at least 25,000 a year to get out and want to make the right moves. I really appreciate the advice.

    • Barbara Raus says:

      Hey Holly – Here are some things to think about:

      1 – You’re right that there’s not really an option to fix the interest rate on your private student loans. If you can afford the payments that’s great, but you still might want to look at consolidation to see if you could get better terms (although the 3.6% that you have right now is fairly low). Remember that you can always pay a little more than the required payments to lower the total amount of interest you will pay over the life of the loan.

      2 – Remember that when you consolidate your federal loans you don’t have to include all your federal loans. You can exclude your loans fixed at 6.8% from the loan and lock in a rate closer to your 2.48% rate.

      3 – Only you can know the best plan for your situation. If based on the stability of your income, etc., you feel comfortable taking that path to eliminate the federal student loan debt (that’s currently at a higher interest rate but has more options if you’d need to postpone repayment) you certainly can. Just keep an eye on the private student loans and if those rates start to change make sure you reevaluate your plan.

      It’s great that you’re looking at all your options as you think about repayment. Since you’re balancing multiple loans it might make sense to meet with a financial advisor to talk through your situation and make sure you’re allocating your payments in the smartest way possible.

  60. Graig says:

    I consolidated my federal student loans back in 2005. About a year ago, the lender raised my fixed interest rate by .625%. After much discussions with the lender, they “determined” that they miscalculated my interest rate when I consolidated, and as a result have corrected it to what it should have been. This seems a little fishy to me, because it took the lender over a month to figure out that it was changed due to a miscalculation. If it was a miscalculation, it seems like this should have been noted on the account. The lender said that the rate I had was lower than the government weighted average and cannot be offered.

    My argument is I chose their company to consolidate with based on the interest rate they were offering me and I signed the promissory note with the original (lower) interest rate. I thought this promissory note was a contractual agreement between me and the lender.

    My questions is:
    Can the lender actually increase my interest rate like this?

    • Barbara Raus says:

      Hi Graig – I’ve never heard of a situation like this before. The Federal Consolidation Loan’s terms state that the rate is the weighted average of the loans you include rounded up to the nearest 1/8 of a percent, so if your lender was charging you a lower interest rate, correcting it would put them in compliance with the regulations. Did you rerun the numbers and double check the documentation from when you consolidated? You could always loop in the Federal Student Aid Ombudsman (http://www.ombudsman.ed.gov/) to help resolve the issue you’re having with your lender.

  61. Lourdes says:

    I will help to payoff my son’s AES student loans since he has been unemployed for the last 18 months.(civil engineer) He has a few ALPN loans supposed to be paid in 10 years at a 4.93 interest rate. I would like to know if paying off ahead these loans would save some interest or do we have to pay those ten years interest even if we pay in advanced?

  62. Steve says:

    I currently have a school loan with another company, which was used to consolidate 3 other school loans. The intrest rate is insanely high (8.75%!!). This loan is in repayment right now for a 30 year payback. Am I able to apply for another loan to pay this off and hopefully achieve a better rate? Thank you.

    • Barbara Raus says:

      Hi Steve – It depends what type of loan you’re dealing with. It sounds like you have a fixed interest rate, which probably means you’re dealing with a federal consolidation loan. That loan’s interest rate is the weighted average of the loans you include rounded up to the nearest 1/8 of a percent. With that type of loan there really aren’t options to refinance. As I’ve mentioned to other readers, you could consider using another type of consumer credit to pay off the loan, however, you’d end up losing the benefits associated with a federal student loan. Now if you are talking about a private consolidation loan (generally those have a variable interest rate) you may be able to reconsolidate to try for better terms. Those loans are based on credit.

  63. DentalDebt says:

    My husband will have three types of loans from his dental education.

    ~47000 in unsubsidized fixed 6.8%
    ~34000 in subsidized
    ~30000 from educational trust with zero interest during repayment.

    My husband will be active duty has been active duty military for the past four years and will be for the next six. Assuming we can qualify for military deferment, we were wanting to aggresively pay his unsub and sub loans off during those three years. Can we pay the minimum on the subsidized for two years, and spend the bulk of the cash towards the unsub? We are trying to keep his interest to the lowest possible. However, I read on another site that if you pay more then your monthly amount, it gets spread across all loans equally.

  64. Christina says:

    Barbara,

    I graduated last year with significant debt, got a job!! and recently started paying my loans back. I am looking for advice on the best way to tackle my loans, as far as consolidation(I am afraid of the varible ones jumping up as the economy gets better) and which to try and throw extra money at first(my private rates are lower than my federal).

    Here is my situation:
    Private student loans-
    67K at 3% variable through lender 1
    43K at 2.05% variable through lender 1
    25K at 5% variable through lender 2

    Stafford student loans-
    5K at 6% fixed
    7K at 6.8% fixed

    Please help! Thanks a bunch!

    • Barbara Raus says:

      DentalDebt – So long as the loans are kept separate and not consolidated into one federal consolidation loan, you can certainly decide to make additional payments toward the unsubsidized loan. You’ll want to check with your lender to see how your payments will be applied if you pay more than the required amount (I’m guessing that you’re receiving a combined statement with one total amount due). Let your lender know how you’d like the overage to be applied. Otherwise you could consider making an additional payment toward just the principal of one of the loans from time to time as you are paying them down.

    • Barbara Raus says:

      Christina – Here are some things to think about as you decide on your repayment strategy:
      - If you’re dealing with multiple private loans with multiple lenders you might want to consider a private consolidation loan. There aren’t really fixed interest rate options for consolidating private student loans; however, you may still be able to get better terms that you have now if you apply with a cosigner who has good credit.
      - There’s no telling what could happen with your variable interest rates. Right now the index rates that many private student loans are based on are at historic lows, so it’s more likely that you’ll see higher rather than lower interest rates in the future.
      - Your private loans will have fewer options to postpone payments should your situation change and making payments becomes difficult. Federal student loans offer deferment and forbearance options that you are entitled to during certain circumstances, while private student loans generally offer a forbearance that is usually at the lender’s discretion.
      Only you can decide what repayment strategy is best for you. Weigh your pros and cons carefully as you decide how to repay.

  65. John says:

    Hello Barbara, I came across your wonderful website and I was wondering if you could help me with my situation. I am trying to decide if I should reconsolidate my student loans through the Federal Direct Consolidation Loan Program. I have a balance of $29,000, which has a “fixed” rate of 3.75% from 1998-2003. I ended up back to again from June 2007 to March 2009 and received both unsubsidized and subsidized loans totaling $14,000. The interest rate as of today for that loan is 6.717% variable. Would I benefit from reconsolidation of both loans? I did some math and it seems like I would be paying about $60 more in interest each year if I chose to reconsolidate. I applied today but was thinking of canceling the reconsolidation. Any advice?? Thank you for your time.

    • Barbara Raus says:

      Hi John – Based on the information you provided I’m a bit confused about your situation, so I want to clarify some things. If you took out federal Stafford loans when you went back to school, those should have a fixed interest rate (those changed to a fixed rate as of July 1, 2006). However, the interest rate that you quoted is variable, so I’m guessing you have a private student loan with Bank of America. But since you also talked about unsubsidized and subsidized I think you probably have some federal loans from that timeframe as well. Am I correct? If that is your situation, federal consolidation might not be the right choice for you. The interest rate on a federal consolidation loan is the weighted average of the loans you include rounded up to the nearest 1/8 of a percent. So, if you combined your current consolidation loan with your new federal loans that are already at a fixed rate, you’d end up with a higher interest rate. However, private student loan consolidation may be an option (if I’m correct that your variable interest rate loan is indeed a private student loan based on credit). Consolidating one or more private loans may help you get better terms on those if your credit situation has changed or if you apply with a cosigner who has good credit.

  66. John says:

    Sorry Barbara, forgot to add something to the earlier post. The $14,000 loan for 6.717% was through the school but the lender is Bank of America.

  67. Amanda says:

    My husband and I each have gov loans at about $50,000 each. We are paying aroung 750 a month, and going into credit card debt due to the inability to pay all of the bills. To get the IBR we have to file our taxes separately because they look at our incomes together, but not our loans together. Going this route we lose out on tax deductions. I have also learned that with IBR we could have the amount forgiven at the end of 25 years, but will have to pay income taxes on that amount. Well since the amount of our payments will be less than the amount of interest, we will have $100,000 in loans pluc whatever is capitalized. We are at our wits end and don’t know what to do. We could lose everything we have and it still wouldn’t give us enought money to pay our bills and loans.

    • Barbara Raus says:

      Amanda – Have you and your husband consolidated your loans or looked into extended repayment (available to borrowers with federal student loan debt totaling more than $30,000)? Stretching out the time you take to pay your loan may mean more interest over time, but it could provide you the payment relief you need right now. Also, as you think about Income Based Repayment, remember a couple things … You will lose the tax benefits of filing jointly as a married couple, however the payment relief may outweigh those benefits if it means you’re able to better manage your expenses. While your payment under IBR now may be lower than the amount of interest charged, remember that it may change as your financial situation does. Also, when it comes to the amount forgiven, remember that will happen quite some time from now, so the amount you’ll have to pay taxes on may not seem as scary when you think about the net present value of the tax you’d have to pay. Check out this link from FinAid on net present value: http://www.finaid.org/loans/npv.phtml.

  68. Adam says:

    Barbara – I commend you for you tireless efforts to help those of us undoubtedly burdened for the next 20 years with our student loan questions.

    I currently have a balance of about $75k through a private consolidated unsubsidized variable loan with Sallie Mae. It currently sits at 3.25%, but I fear it will skyrocket (along with my $415 monthly payment [a manageable 13% of my monthly take-home pay]) when the economy recovers.

    Are you aware of anything in this new federal health care/student loan bill that would allow the government to purchase this private loan from Sallie Mae to offer me a fixed rate loan? If not, are you aware of any other options for another lender to purchase this private loan and give me a fixed rate?

    I am looking to purchase my first home with my wife, but I am fearful that my rates and monthly payment will jump a few hundred dollars, leaving me in a precarious situation.

    As an aside, I have been writing my congressmen and Senators for quite some time on an idea I had (but haven’t heard back), and I was wondering if you have ever heard it discussed in the political and/or financial world:

    Wouldn’t it be nice if students (or parents) paying off student loans (federal or private) could use pre-tax income to pay off loans – similarly to how I can do that now on my health plan’s HSA account? It would certainly be a nice benefit for students, along with parents paying off student loans for their children. I know we can get a tax write off of up to $2,500 per year for interest, but this would go a long way towards lowering my tax bracket as well. What do you think?

    • Barbara Raus says:

      Hi Adam – Thanks adding the interesting perspective to our conversation. As far as the government purchasing private loans, such legislation has been proposed in Congress: http://thomas.loc.gov/cgi-bin/bdquery/D?d111:32:./temp/~bdETmm::|/bss/|, but this was not included in the Health Care and Education Affordability Reconciliation Act. There are options with other lenders to reconsolidate private student loans (including those that have already been consolidated), however, those loans will generally still have a variable interest rate. I’ve not heard of something like your pre-tax payment suggestion before. It’s great that you’re reaching out to your legislators about the topic.

  69. paula harris says:

    why does the dept of education take my income tax returns when i am sending them money each month? why do i have to pay the loan back when the school closed the first class after we signed over our (the students) grants and loans. and if the school was still open, why didn’t any body inform us of this, instead of hasseling me to pay back the monies?

    • Caroline Hanson says:

      Hi Paula – I’m sorry to hear that your school closed. To answer your first question, if your loan has entered default, the Department of Education can withhold your income tax refunds and apply it toward the amount you owe. While it’s good that you’re making payments, the Department of Education may continue to withhold your tax refunds to assure that they receive payments. If you’ve made regular payments for some time, you may want to contact them regarding this issue.

      As for why you have to pay the loan back when your school closed, without knowing all the details, I can’t answer that question for certain. However, assuming you have a Federal Stafford Loan, the Master Promissory note does state that in certain cases a loan can be discharged if a borrower can’t complete their course of study because the institution closes. You can search to determine whether you school is closed at this site: http://wdcrobcolp01.ed.gov/CFAPPS/FSA/closedschool/searchpage.cfm. This page also has contact information for the Department of Education’s Closed Schools Unit. This might be a good place to start to see if you’re eligible for a loan discharge.

  70. Fran says:

    I have approx. $30,000 in loans with Wells Fargo. $20,600 in federal stafford subsided and unsubsized loans and a PLUS graduate loan for $10,000. Just received notification that the servicing of these loans has been transferred to Dept. of Education. I will not graduate until next year. What does this mean to me and does it mean that I cannot apply to Wells Fargo for the coming year’s loans.

    • Barbara Raus says:

      Hi Fran – Good question, thanks for bringing it up. You should be receiving an additional communication from the Department of Education with some more details about how your loan will be serviced through them. Through the Ensuring Continued Access to Student Loans Act lenders like Wells Fargo transferred loans to the Department of Education. The Department should be letting you know which of their servicers will be handling your loans going forward. As for next year, legislation recently passed and signed into law (The Health Care and Education Reconciliation Act of 2010) eliminates the Federal Family Education Loan program (which allows private lenders like Wells Fargo to make federal loans) and has schools instead use the Direct Loan program for federal student loans. So starting July 1, 2010 federal loans like your Stafford and PLUS loans will be originated through the Direct Loan program. With that, you can apply with Wells Fargo only if the following criteria are met:
      – your loan period includes or begins on or after July 1, 2009
      – your loan has a first disbursement made between May 1, 2009 and June 30, 2010
      – your loan will be fully disbursed no later than September 30, 2010.

  71. Brian Geriani says:

    I have a loan that I just currently started paying back in february in the amount of 38,000 plus interest capilized in the amount of $2,475.38 so that makes it about 40,000. I have two questions..I am currently on the graduated payment where I pay interest only for 2 years for 234.16 and then it will jump to $545.00 after that for the next 8 years. If I pay more then the 234.16 for the next two years, will my monthly payment change at that time.and will that lower my principal balance. Also, how I do I pay or lower that capitalized interest so that the principal balance starts going down before that two years is up?

    • Barbara Raus says:

      Brian – With the graduated repayment plan for federal loans, you must pay at least the interest accrued each month. So, your payment will cover that. Any additional money you pay will go towards your principal balance. Talk with your lender to ensure that any payments you intend to pay down your principal will be applied that way. Any extra that you can put towards the principal balance (which now includes that capitalized interest) will help you reduce the overall interest that you pay over the life of the loan.

  72. Adam says:

    Barbara – thank you for your prompt reply. I would love to include the proposed legislation in my next letter, however the link you provided is not working for me.

    If you don’t mind, would please post it again?

    Regards~
    –Adam

    • Barbara Raus says:

      Hey Adam — Sorry for the bad link! Looks like I can’t actually link you directly to the bill.

      Try this:
      - Go to
      http://thomas.loc.gov/
      - Search by bill # S.1541

      The result should give you an overview of the bill and a link to the full text.

  73. Kristin says:

    Hi there. I have a pretty significant amount of private student loans, and I am looking to consolidate them. Pretty much every program I have found has a variable interest rate. I was wondering if a) there are any private fixed consolidation loans and b) if i consolidate and still have a variable, is there any sort of max interest rate or a cap? I ask this because I hear people taking about inflation, interest rates going up, etc. and it is worrying me that I will suddenly have student loans with 15% interest rates. Any ideas, tips, etc? Thanks

    • Barbara Raus says:

      Kristin – you’re right that there aren’t really options to consolidate private student loans at a fixed interest rate, and you’d have to check the specific terms of the loans you’re considering to see if they had an interest rate cap. One thing you may want to think about as you look at what could happen with your rate is how your index rate (generally private student loans are an index, like Prime Rate or LIBOR, plus a margin) has looked historically. This may give you a better idea of what your rate could fluctuate to. The biggest tip if you’re concerned about the overall amount of interest you’re paying is to pay a little more toward your loan than is required each month to chip away at the principal balance. That will mean paying less interest over time.

  74. John says:

    Hello,

    I am hoping you can help. My wife has a considerable amount of student loan debt with Sallie Mae. Yeast ago she consolidated and as far as she is aware, can not refinance again to take advantage of the more recent rates which are much lower these days. Are there any options for refinancing other than home equity or personal loans. It seems to me that some financial institution out there would want to buy this loan.

    Thanks
    JOHN

    • Barbara Raus says:

      John – Did she consolidate her federal student loan debt? If so, she locked in her interest rate and paid off what were variable interest rate loans (made before July 1, 2006) that are now at historic lows. There aren’t options to get back to those rates since consolidating means taking out a new loan with new terms to pay off the loans you include. You could consider any type of consumer loan to pay off that debt, but it might not be the smartest option. With a federal student loan, there are options to postpone payments should your wife need to, plus they may have tax benefits (consult your tax advisor for more info). Now, if you’re talking about private student loans, there are options to re-consolidate to try for better terms. However, your wife would want to make sure that the new loan would make more sense financially.

  75. Brian Geriani says:

    Hello..I had just gotten approved for deferment on my federal stafford loan due to ecomonic hardship. Although, I do show that i do not have to make payments untill 1 year from now, but I do want to continue to make payments on the loan so that the subsidized loans due not accrue interest because it would be then capitilized at the end of deferment. since the loan is deferred like it was before after I graduated, does that mean I have that advantage of paying down the interest so it doesn’t acrue over time and I could knock some of that principal balance off the loan before the deferment ends again. That would of course recalculate my monthly payment again, correct?

    • Barbara Raus says:

      Brian – If your loans are subsidized, the government will pay the interest you accrue during your deferment period. If you also have unsubsidized loans, that’s where interest accruing would be your responsibility and be capitalized at the end of the deferment period. If that’s the situation, you should have options to repay your interest and principal during the deferment period. You’ll need to check with your lender to see how to go about doing that as the process may be different. Is your loan with Wells Fargo? When you come out of your deferment, the monthly payment will be calculated on the principal balance plus any capitalized interest. So, payments you make during the deferment would mean a lower payment when you come out of deferment than what you would’ve seen if you hadn’t made any payments during that period.

  76. M Britt says:

    I had private student loans that charged off due to unemployment. I am now on a repayment plan and have made 4 consecutive timely payments. The lender is telling me that my credit report will continue to reflect these loans as charged off until I pay them completely off. With a balance of $100K, that will be years away. Is there anything I can do to “rehabilitate” the loans like you can do with Federal student loans?

    • Barbara Raus says:

      Unfortunately, once your loans have been charged off, they’ll generally report to the credit bureaus as such until they are completely settled. There aren’t the same options for rehabilitation on private student loans as there are for federal student loans.

  77. Margie says:

    My husband and I each had about $45000 in student loans. We took a consolidation loan in 2005 – all in his name – and have been faithful in our payments. We are wondering if it would be better for us to file taxes separate next year and apply for the IBR repayment. According to the Direct Loan website, Arizona is a community property state and thus, half of my income would be added to his filing. Even so, it cuts the payment by over $200 a month. And – is forgiven after 25 years (we’ll probably be long deceased by then)

    I am a teacher but will not continue in the field for another 10 years so that doesn’t help. Also worked for a Title 1 school for 10 years but had a loan just 2 months before the “deadline” of having loans to qualify. There are so many “gotchas” on the loan forgiveness.

    Anyway, wondering if you think we should do the IBR plan and will they do it even though it’s both my loans and his (but consolidated in his name only) ?

    Thanks for a great website!!!

    • Barbara Raus Barbara says:

      Margie – There are a couple pieces of your situation that have me a bit confused, so I’m hoping you can clarify. IBR is only available for federal student loans. If you did consolidate both your loans and your husband’s into a Federal Consolidation Loan, both of you are responsible for the loan. Are you dealing with federal debt or did you consolidate private student loans?

      If you have a Federal Consolidation Loan, the promissory note that was used in 2005 states that any references to the borrower within the agreement apply equally to the borrower and the borrower’s spouse unless otherwise stated, so the debt is in both of your names.
      With that said, here’s some more information for you. Check out the FAQ about IBR here: http://studentaid.ed.gov/students/attachments/siteresources/IBRQ&A_template_123109_FINAL.pdf. There’s a question specifically about joint consolidation loans (#25). Basically, you each need to apply for IBR and your joint income will be considered since you are jointly liable for the debt.

  78. Dan says:

    Barbara is it true that if you refinance your student loans once you are not elligible to refinance again? I have been told this for years by several different companies. I refinanced my Sallie Mae student loans with Great Lakes however I am still paying over 7% interest. Is it possible to refinance again although I have already refinanced once?

    • Barbara Raus Barbara says:

      Hi Dan – I’m guessing you’re talking about consolidating your federal student loans. When you consolidate these loans the consolidation loan (what you’re referring to as refinance) has an interest rate that is the weighted average of the loans that you include rounded up to the nearest 1/8 of a percent. Those terms are set by the government and once you’ve consolidated, the separate loans no longer exist and the rate is fixed. There aren’t really options to change those terms. Now if you’re talking about a private consolidation loan, it’s a different story. Those are based on credit and you would likely be able to reconsolidate that kind of loan if your credit situation had changed and you wanted to try for better terms. Those interest rates are variable, however, and may fluctuate over the life of the loan.

  79. Cherie says:

    Hi,

    I am starting graduate school and will be taking a fairly small loan to help me with living expenses. I have a few loans from my undergraduate, and one private loan in particular that gathers interest while I’m in school. All the others are in deferment until I complete my Masters. I’ve been offered better rates for graduate school since I am now not a dependent of my parents. Does it make sense to get a slightly larger loan now (with better rates) to pay off my older loan?

    • Barbara Raus Barbara says:

      Hey Cherie – Let’s clarify a couple things. First off, most of your student loans should be accruing interest while you are in school (if you have subsidized Stafford loans that interest is paid by the government during school and times of deferment). Did you mean that you’re currently making payments on that private student loan? About the loan you’ll be taking out to cover this year’s costs: remember that the loan amount you’re approved for will be based on how much it’s estimated you’ll need to cover your costs and is to be used to cover the approved expenses you’ll incur.

  80. Reed says:

    Hi Barbara,
    Thanks for the post. One thing that is still unclear to me (I hope I didn’t miss it in the comments) is that the Direct Loans seem to still have a high interest rate. I recently finished graduate school and the weighted average interest rate for the consolidated loan would be more than 7%. Isn’t there a way to get that interest rate lowered? It seems interest rates are low and there should be another option rather than having that interest rate stuck with the balance of the loan regardless of the creditor. Thanks again.
    Reed

    • Barbara Raus Barbara says:

      Reed – You’re right, the way federal consolidation works is that the interest rate on a new loan that pays off the loans you are consolidating is actually a bit higher than if the loans remained separate. It is a locked rate so once you consolidate there aren’t really options to lower that rate. Those terms are set by the government.

  81. Jean says:

    Barbara,

    I want to clarify – One can not refinance Federal loans to get the interest rate lowered – is that correct.

    If I have $200,000 in loans at 7% is there ANY way I can lower the rate so I can afford the payments.

  82. Sylvie says:

    I am in the same boat like Jean. I have 68K worth of student loans @ 7.50%, fixed; thru Sallie Mae. I just got off the phone with them and they said they can not lower the interest rate. I just want to get rid of this thing once and for all.

    • Barbara Raus Barbara says:

      Sylvie – Check out the information I posted back to Jean. Are you in the same boat of wanting to reduce your payment, or are you wanting to reduce the total amount you pay? If it’s the latter, know that one of the best ways to do that is by paying more than is required each month. That way you’re chipping away the principal balance a bit faster and reducing the amount that’s being charged interest.

  83. Roger says:

    I have consolidated student loans with a 4.635 interest rate. I see some rates 2 to 3 points lower than that online. Is there anything i can do to lower the interest rate since your blog mentions the fact that you cannot refinance student loans. I am not in financial hardship but as part of my divorce i pay the full amount but my ex wife does not send me the half she is responsible for per our divorce decree. I am looking for options to reduce the monthly amount without extending the time in order to pay the balance off quicker.

    • Mo says:

      I have a similar situation as Roger. While I was in grad school there were all sorts of experts reporting that “now is the time to consolidate your student loans”, so I did in 2006 through the Federal Direct Loan Program. Since then student loan/consolidation rates have significantly dropped. I have a few more months of grace period, excellent credit, and a good salary, but I also have close to $50k in student loans. What can I do to reduce my rate?

    • Barbara Raus Barbara says:

      Roger – it depends what kind of consolidation loan you have. If you consolidated federal student loans, the federal consolidation loan has a fixed interest rate that is locked in for the life of the loan. Unless you paid it off with another type of consumer credit, you’re going to have that interest rate until it is paid in full. If you’re looking to reduce the amount of interest you pay, the best plan of attack is to pay a little more than is required each month. That means more of your payment goes to the principal balance and less principal balance is charged interest on the next bill. Another option to consider is if your lender offers an interest rate deduction if you pay automatically. That could save a little every month, too. Now, if you have a private consolidation loan (rates are usually variable and the loan was used to pay off private student loans), you could reconsolidate it to see if you could qualify for a lower interest rate.

  84. AJ says:

    Hello,

    I have $40k in Stafford Graduate and Graduate Plus loans at 8% fixed and was looking to refinance those to get a better rate. I recently graduated from a top business school and know that many lenders are fighting for yield given treasuries are at all-time historic lows. I am wondering how I can capture this lower interest rate for myself. I am fully employed, have a credit score above 780 and am a sound credit risk. Any suggestions for me? Thanks.

    • Barbara Raus Barbara says:

      Hi AJ – Right now you’ve got a fixed interest rate that won’t change and can’t be refinanced to a lower interest rate – the option to consolidate this type of loan actually would increase your interest rate as the rate on a federal consolidation loan is the weighted average of the loans you include rounded to the nearest 1/8 of a percent. You could consider using another type of consumer credit (personal loan, home equity, etc., depending on assets), however the federal loans that you have include some repayment options and possible tax deductions that you might lose if you went this route. The best way to reduce the amount of interest you pay over the life of these loans is to pay a little more than is required each month and reduce the amount of principal that is being charged interest.

  85. Megan says:

    Hi there. I graduated from undergrad in 2008 and consolidated my private loans with Wells Fargo shortly after graduating. I currently have an 8% (ahh!) interest rate on my repayment.I am wondering if it is possible to transfer my consolidated loans to another lender (with a lower interest rate as the goal). Or, what the best way is to have my interest rate reduced. Thank you!

    • Caroline Hanson Caroline says:

      There are a couple of ways to potentially reduce the interest rate on your private consolidation loan. You could possibly reconsolidate with another lender, although there aren’t a lot of other lenders who do private student loan consolidation. Other options are to reconsolidate with Wells Fargo. If your credit has improved significantly, you may qualify for a better rate. You may also reconsolidate with a cosigner, who may help improve your rate. Or, if you already have a cosigner, you may wish to reconsolidate with a different cosigner who may potentially improve your rate.

  86. Kara says:

    Hello,

    I have two subsidized and two unsubsidized Stafford loans through Wells Fargo. On my statement, they are listed as “Federal” under “loan type.”

    Am I able to consolidate these loans through the Direct Loan Program? Or are they considered “Private” and not eligible?

    Thank you!

    • Barbara Raus Barbara says:

      Kara – those are all federal student loans that could be consolidated through the Direct Loan program. If you’re thinking about consolidating be sure to remember that a federal consolidation loan has an interest rate that is the weighted average of all the loans you include rounded up to the nearest 1/8 of a percent, so it’s possible if you have fixed interest rate loans that you are including (made July 1, 2006 or after), you may end up with a higher interest rate. But if you have variable interest rated federal loans (made before July 1, 2006) you’d be able to lock in an interest rate by consolidating.

  87. In Over My Head says:

    I have 8 loans that total $184K in a mixture of Stafford, Grad PLUS, and Business Education Loans through Sallie Mae. The weighted average interest rate is 7.45%. I have an additional $8K in accrued interest. And another $33K spread across 1 Perkins and 2 Private Loans. Because of the economy it took a lot longer to find a job and once I did my starting salary is 50% lower than I planned prior to attending grad school. Therefore, I am at the point where I cannot even afford interest-only repayment options. I am considering IBR (Income Based Repayment) until my salary increases (and hopefully it will increase enough). However, with this option, the unpaid interest will accrue. So I am trying to lower the 7.45% average down as much as possible. Refinancing does not seem like an option since my credit score is actually lower now than when I took out the loans. I would like to at least refinance the loans that I have at 8.5% interest rates (3 of them). But I am also willing to take any other advice you may have to offer.

    • Barbara Raus Barbara says:

      In Over My Head – It sounds like you’re on the right wavelength for your federal loans. If your income can’t sustain the payments IBR is a good option for you. Another option would be consolidation or asking your lender about extended repayment. As far as your private loans are considered, there are options to consolidate, which would essentially be refinancing, and include a cosigner on that loan . If you have someone willing to do so who has excellent credit you may end up getting better terms on the private student loans.

  88. Cassie says:

    I currently have private loans that are due, however I am currently unemployed. I am unable to find a job for what I went to school for. I was under the impression that I could defer them due to my circumstances, but was told I am unable to do so. Is there any other way to go about this. I hate the fact that my mother cannot pay on this loan by herself, yet I have no way to make the payments.

    • Barbara Raus Barbara says:

      Hi Cassie – with private student loans there are generally options to postpone your payments through a forbearance, but that is something that is at the discretion of the lender. Have you talked to your lender about a different kind of repayment plan? There may be options to lower your payment rather than postpone them completely.

  89. sick of seeing 8's says:

    I need some help and don’t have time to read all of these posts which i’m sure contains all of the information i need. i have one private loan approx $50,000 (8.4%). one federal loan about $17,000 (3.4%). First of all can i consolidate the two? I don’t think that is an option so if not, is there a government program that can reduce the interest on my private loan? what are my options?

    • Barbara Raus Barbara says:

      Hi there – We never recommend that you consolidate private and federal student loans together. But you can consolidate them separately. It sounds like you have variable interest rate federal loans (made before July 1, 2006). With a federal consolidation loan you could lock in an interest rate since that loan has a fixed interest rate that is the weighted average of the loans you include rounded up to the nearest 1/8 of a percent. There are also options to consolidate your private student loans. A private consolidation loan is based on credit so you could apply with a cosigner who has good credit to increase your chances of better terms on the loan.

  90. Misty Hunt says:

    Hello,
    I have a perkin’s loan from 1999 that is in default status with a collection agency. I am unemployed, full time student with credit I am not proud of. I currently have a 4.0 GPA, but I am in desperate need of federal assistance, so I can stay in school. Since I have only one loan, and can not consolidate, I was told my only option was to pay the loan in full. I’m trying really hard to make a change, but I keep running into brick walls! Do you know of any programs to get me out of default status or help me transfer this loan…anything, as soon as possible?

    • Caroline Hanson Caroline says:

      Hi Misty — Loan rehabilitation may be an option for a Perkin’s Loan. You’ll need to work with the school you obtained the loan from in order to determine whether this is an option for you.

  91. Megan Gupko says:

    I currently have a consolidated student loan (they were Stafford loans) with a company which I have been paying on since 2005. I am on a graduated plan and have never missed a payment. Recently my payments went up, however when I logged online to see what the new payment would be it told me one amount, which I paid via automatic payment. Now the lender is saying that I underpaid by $5. Apparently their website was incorrect. This was not an issue, I simply paid the $5 and late fee as soon as I recieved the notice. A week later they are telling me my interest rate will permanently go up by 1% because of failure to pay the full amount the previous month, despite the fact I have explained that I paid on time every month for the past 5 years, and that their webpage was incorrect. In fact their webpage is still incorrect as it shows I owe only $4 for this month. The customer service has been terrible with this company and I would simply like to change lenders, but I am having trouble finding out if I can do this. Can I simply apply for a loan and change the company which services my current loan?

    • Caroline Hanson Caroline says:

      Hi Megan—that’s a very unfortunate situation. I suggest you pursue the self-resolution steps offered by the Federal Student Loan Ombudsman (the Ombudsman’s office can’t help you until you’ve pursued all your options for self-resolution). Check out the Ombudsman’s web page here: http://www.ombudsman.ed.gov/about/contactus.html and click on the self-resolution checklist. From there, you’ll want to look at section D (disputes) and follow the steps they list there. Essentially, you’ll need to submit to your lender a written explanation of your dispute along with appropriate documentation.

  92. Gonzalo says:

    I have about 60k in stafford loans locked at a interest rate of 6.8% (A mix of subsidized and unsubsidized). Is there anyway I can take advantage of the historically low rate right now, and effectively refinance my student loans?

    • Caroline Hanson Caroline says:

      Thanks for your question, Gonzalo. You cannot refinance a Federal Stafford Loan, since the rates are fixed. The historically low interest rates only affect variable rate loans.

  93. Orti says:

    Hello there! I’m a primary care physician with medical school loan. I’ve paid over $50,000 during the last 4 years and was able to drop my loan from $219,000 to $207,000! The rest went to the fixed 5.37% interest rate! Is it possible to switch to another private company with significant reduction in interest rates? Because of my income I can’t deduct interest from my taxes either.

    • Barbara Raus Barbara says:

      Orti – I’m guessing that your fixed interest rate debt is a federal consolidation loan. A fixed rate of 5.37% is probably better than most of the variable interest rates you could get on a personal loan or private consolidation loan. Plus you’ll have more options should you need to change repayment plans or postpone payments. The best way to reduce the overall interest you’ll pay on the loan is to pay a little more than is required if you are able. You’ll slowly chip away at your interest that way and be charged less interest over time.

  94. Brandon says:

    Between college and Graduate school I had accumulated several educational loans through Wells Fargo. Two years ago I consolidated those loans into 2 separate loans, both with Wells Fargo

    I recently filled out the paperwork so that I could consolidate those loans through the Federal consolidation program. When I call to check on the status of the loan consolidation, they tell me that the paperwork was sent to Wells Fargo and they are still waiting to hear back. The paper work was sent nearly 2 months ago.

    I graduated back in May, but have not been able to find work yet. I made payments on these loans while in school, and have not missed a payment since they became due.

    What is the Wells Fargo’s turn around time for matters like this? Is there any department I can speak to?

    Thanks!

    • Barbara Raus Barbara says:

      Brandon – Please email us through the Ask the Expert tool where you can provide us with more details. (A full name and account number would be helpful) With that information we can look into your situation and answer your question.

  95. Brittany says:

    Hi Barbara,

    Are there any loan forgivness programs for private loans?

    If not, is it it possible to refinance a private loan in to a federal loan program some way?

    I currently have two private education loans. After graduating from college in 2008, I began work with a non-profit company earning very low income. So far, I have only heard or read about forgivnesss programs for federal loans.

  96. tabitha says:

    Hello, I am in default of my stafford student loan and was contacted by the debt collector. They said that the loan company, AES, would allow me to pay back the loan and remove the defult status on my credit report after 9 consecutive payments. I am scrounging to find the monthly $380 each month and have made 3 payments so far, in another week it will be 4 payments made. They know I have not been working in close to a year but have just found a small part time job that barely pays bills and I’m behind on my car now, which has to be paid so I can get to work. After the 9 payments have been made they said i can enter the rehabilitation program but that the additional interest, fees, etc will remain on there and whomever takes over my loan, will redo it at 18% on the current principal and interest. I am not sure that I should continue on with the monthly payments if at the end my $30 (not $51k with fees) will continue to go up when financed at an additional 18%… Do I have any other options? I want to pay what I took out but so hard when they add on more fees and then want to add on more at the end of the 9, $380 monthly payments.

    • Caroline Hanson Caroline says:

      Tabitha – It’s great that you’re starting to make payments on your loan. However, once your student loan enters a default status your options for repayment are limited, and the additional fees are the result of your loan being in a default status. Once you have completed the 9 months of payments, check with your loan holder to see if you can continue payments at an amount that is more befitting of your budget. (At that point, you will have proven your willingness to make regular payments, so it may be worthwhile to ask about this.) Talk at length with your loan holder and get all your questions answered. Ask for a repayment schedule, so you can understand exactly what it will take to get your loan and all accompanying fees paid off. If you choose not to continue making monthly payments, the consequences may be more severe—your wages may be garnished or you may even face legal action.

  97. Tim says:

    Barbara,

    You are being to kind to the lenders.

    Why is it that i can be a 45 year old irresponsible person who gambles, smokes and drinks his way into a financial mess but can be given a free pass (bankruptcy etc…) and start over debt free.

    However, if I am an 18 year old kid with minimal life experience and take out a student loan and a few years later am unable to pay the full amount back each month becuase of an illness or a job loss, i have pretty much zero options except to listen for the debt collectors threats?

    I am stuck with an $800.00 a month student loan, which I have paid back and then some without a break for the last 13 years and still owe over 22,000 dollars. (stuck at 8% with sallie mae and already consolidated).

    Your readers might want to look into the lending companies that benefited from immoral legislation passed in the late 90′s that allowed sallie mae and the like to become jnot fully public and not fully private corporations to become all-powerful leaving that 18 year old (with a credit score of over 800) without any feasible choices.

  98. Anonymous says:

    Can Wells Fargo pay off my parent plus consolidated federal student loans under private loans. My interest is high and I have delayed on three payments although now I have brought them current.

    • Barbara Raus Barbara says:

      Anonymous – we never recommend that you use a private student loan to pay off federal student debt for a couple reasons. Right now you have a fixed interest rate on a federal consolidation loan. A private consolidation loan would have a variable interest rate that could fluctuate over time. Plus, private loans are based on credit, which means you may not be able to secure a lower interest rate than you already have depending on your situation. The last thing to remember is that federal student loans have more options to postpone your payments if you are having trouble repaying.

  99. Kenneth Robinson says:

    Hi Barbara, I had several loans that have been consolidated into 2 loans. One consolidated loan is $4,939 with a fixed rate of 6.8%. The monthly payment is $58/mo. The other loan amount is $18,019. My monthly payment is $217/mo. 3 of the loans that were consolidated into the $18,019 loan are at a 6.8% fixed rate and the one other loan rate is 2.47% variable rate. Would it make sense for me to consolidate the 2 remaining loans into 1 loan or should I attempt to get the payments lowered?

    • Barbara Raus Barbara says:

      Kenneth – it sounds like you’re dealing with a federal Stafford loan given the 6.8% rate that you’re quoting and a Federal Consolidation loan with the other consolidation as you had two that were 6.8% fixed. If that’s the case, you probably consolidated to a fixed rate loan when you combined your three loans in the $18,019 loan. The rate of a federal consolidation loan is the average interest rate of the loans you include rounded up to the nearest 1/8 of a percent. When you consolidate the loans that you include are paid off by the new loan you are taking out. So the interest rates that you talked about (6.8% and 2.47%) would have been averaged for the total $18,019. So, you’re asking if you should consolidate that consolidation loan with your other loan. Since the other loan is already at a fixed rate, you wouldn’t benefit from any interest rate changes. In fact you’d see a bit higher interest rate since it’d be rounded up to the nearest 1/8 of a percent if you combined these two loans through a federal consolidation loan. If you’re looking for payment relief you should check into other ways to lower your payments. If you want to lower the total interest you pay over the life of your loans consider paying a little more than is required each month to pay down your principal balance.

  100. ro says:

    i just got a loan offer that doesnt make sense..

    loan amt..25,000
    int rate..7.74
    fin chge..26,000
    tot pay..51,030 over 15 yrs
    that sounds like a lot interest..
    advice please

    • Barbara Raus Barbara says:

      ro – I headed over to the calculators on wellsfargo.com to check the math (https://www.wellsfargo.com/student/planning/calculators/alternative), and it looks like calculating a $25,000 loan with a 7.75% interest rate and a 15 year repayment term estimates paying a total of $17,357.41 in interest with a total amount repaid of $42,357.41. Looks like there is a difference in numbers … was the loan offer from Wells Fargo? If so, please send us a few more details through the Ask the Expert tool and we can look into the issue.

  101. Kathy says:

    My son has a Sallie Mae loan that I co-signed. It is difficult for either of us to make the interest payments while he is in school. Can we refinance this loan even while he is still in college?

    • Barbara Raus Barbara says:

      Kathy – You could consolidate the private student loan, however, because consolidation usually happens after the student has graduated private consolidation loans generally go into repayment immediately so you’d be responsible for a full payment rather than just an interest payment that’s required on the loan you currently have. One thing to consider is if your son needs another private student loan to find an option that doesn’t require interest payments while in school.

  102. Dana says:

    I graduated in May 2009 with about $20,000 in Federal Direct loans and during my senior year, I borrowed an additional $15,000 in one single private loan. This loan has a variable interest rate at about 14% right now. The balance is already climbing above $20,000. On this loan, I have exhausted my deferment options and am supposed to start paying back that amount in December. I believe that the estimated payment over time will be close to $60,000 with the current interest rate. I can probably manage my Direct loans and believe I can continue to get them deferred, at least for a little while. I cannot, however, manage to pay back both loans with the payment options that my private loan is offering. I would like to refinance this loan but have no idea where to start. My credit union does not offer much in terms of student loans. My credit score is in the 700′s but my debt-income ratio is rather high from accumulated credit card debt, which totals close to $6,000.

    I have a good job, although it is only a contract position for 1-2 years and it is in the air on whether my position will ever become permanent.

    Any suggestions?

    • Barbara Raus Barbara says:

      Dana – There are private consolidation loans available that may help your situation. If you apply to consolidate your private student loan with a cosigner who has good credit you may be able to get a lower interest rate than the 14% you have currently. You could also try applying on your own to consolidate, but having a cosigner could increase your chances of approval. Wells Fargo does offer a private consolidation loan.

  103. Kathy says:

    You mentioned that my son and I find another private student loan that doesn’t require payments until after he graduates. Do you know of any lenders that would consolidate the Sallie Mae he now has with this new private student loan so we would not have this interest payment?

    • Barbara Raus Barbara says:

      Kathy – I’m not sure about other lenders, but Wells Fargo’s private consolidation loan does not have a grace period, so he’d have to start making full payments immediately. There are private student loans that have a longer grace period and don’t require in-school payments, but qualifications for those are based on the students cost of attendance for the particular term the loan is meant to cover. Has your son talked with his financial aid office about his situation? Depending on when your son took out the loan it may be able to be cancelled by the school and he could take out a loan that did not require in school interest payments to cover his costs. Let us know what we can do to help with the FAO.

  104. Tyler says:

    I have about $60,000 in federal student loans. Two are Stafford Subsidized (6.8%), two are Stafford Unsubsidized (6.8%), and two are Grad Plus(8.5%). Blended together, it comes out to about 7.5% with monthly payments of $715/month on a 10 year repayment plan. I would like to refinance to a lower rate and lower my monthly payments. I have a job and have a really good credit score. If need be, I could come up with a co-signer. My grace period ends very soon. What options do I have to refinance/consolidate? Thanks!

    • Barbara Raus Barbara says:

      Tyler – You can consolidate your federal debt through a federal consolidation loan, however, you wouldn’t see an interest rate savings if you combined all your loans together. The interest rate on a federal consolidation loan is the weighted average of all the loans you include rounded up to the nearest 1/8 of a percent. So you’d actually end up paying more over the life of those Stafford Loans. However, you could consider consolidating just your two PLUS loans. The federal consolidation loan has an interest rate cap of 8.25% so you’d save a quarter percent in interest if you consolidated. Remember, though, that consolidation usually extends the repayment term, so you could end up paying more interest. However, since there isn’t a prepayment penalty, you’d be able to pay more on the loan if you were able to, which could save you interest in the long run.

  105. Charles says:

    I have a signature student for about $28,000 at an interest rate of 11.25%! I also have 3 stafford loans under $6,000 together. I make a $350 payment each month, but seems like it’s not cutting into the principle. I have a lot of other bills and cannot afford to pay more. Do you have any ideas on how to lower the interest rate or put the loan on hold until i can pay more and not waste $350 a month!

    • Barbara Raus Barbara says:

      Charles – You could consolidate your private student loan to try for better terms. If you applied with a cosigner who has good credit you may be able to lower the interest rate on the $28,000. Remember that each payment does chip away at your balance, and if you were to postpone those payments, the interest would continue to accrue and might possibly be capitalized (added to your principal balance and be charged interest) when you come out of a deferment or forbearance. So if you are able to make the $350 payment it’s a smart idea not to postpone your payments.

  106. Hello says:

    Hi, I have 2 questions:
    I have 2 private student loans from Sallie Mae total for about 20000 and interest is abuot 10,5%.I was thinking to refinance/consolidate my loans but I did not find many institutions which can do that for private loan. Can I appply for Federal loan and transfer my private loan to it? Or can I apply for regular loan with a better interest rate.
    I did apply for Wells Fargo consolidation, but they did not approve my co-signer( it is so strange) because he has over 750credit score and good credit history( he was approved to buy a new house)…But I am still waiting for the letter from Wells Fargo( maybe they will approve me without a co-signor) and give me a better interest rate.
    I really need to refinance my loan so I can make less payments at the moment( I am stay at home mom) , just for couple of month( to save some some money), after I come back to work and can pay off the loan pretty fast
    Any advice would be helpful:)thanks

    • Barbara Raus Barbara says:

      Hi there – If you’re looking to consolidate private student loans there aren’t any options at this point to do that through the federal loan program. A federal consolidation loan cannot include private student loans.

      A private consolidation loan like you applied for with Wells Fargo is the option you’d want to consider if you’re looking to get better terms on your loan. If you want to contact us with a little more information through Ask the Expert I can look into your situation with a few more details.

      In general, here are a couple things to remember. When lenders make a decision on whether someone qualifies for a loan they take a number of things into consideration. In addition to credit score and history, the lender might look at a debt to income ratio or other criteria. So the cosigner might not have qualified because of other things.

  107. Andrew says:

    Barbara,

    I have two private student loans, one with Wells Fargo and one with Sallie Mae, both for around 20,000. Should I consolidate both into one and which financial institution would you recommend?

    I was thinking about using Wells Fargo, but not sure if I would get approved. I’ve also heard horror stories about Sallie Mae and their shady dealings/refusals to allow loan consolidation. I’m going to have to start paying these back and am very worried about the monthly cost.

    Thanks

    • Barbara Raus Barbara says:

      Andrew – It depends why you’re thinking about consolidation. Did you want to try to get better terms on your loan or are you just trying to simplify repayment? Consolidating can sometimes ease your monthly obligation because you are usually extending the repayment term. But another benefit, if you bring on a cosigner who has good credit, is that you may be able to get a lower interest rate. So either way, consolidation could be a solution for you. Wells Fargo does have a private consolidation loan that you can apply for with a cosigner. Check out this page for more details: https://www.wellsfargo.com/student/consolidateloans/privatestudentloans

  108. Patrick says:

    Hey Barbara,

    I have $19,000 I owe in a private student loan. I also have $10,000 in my personal savings/emergency fund. How much of my personal savings should I put toward my that private student loan 4.5% private student loan?

    • Barbara Raus Barbara says:

      Patrick – You’ve got a question that is a tough one for a lot of folks (including me!) – what balance of savings vs. debt should you have. Whether it’s credit card debt, student loans, or a mortgage, there are many places savings could be used to pay down debt. Only you can decide what will work best for you, but I’ll give you a few things to ponder:
      - Having an emergency savings means avoiding putting emergency charges on a credit card – which may have a higher interest rate than your student loan.
      - Student loan interest may be tax deductable, so you may reap some tax benefits while you are paying off your student loan (contact a tax advisor for more details)
      - Private student loans generally have variable interest rates, meaning they may go up or down over the life of the loan, so you may not have that 4.5% rate forever.
      - You’re probably being charged more in interest on the loan than you are earning in interest on your savings.
      - You can always decide to pay more later since student loans have no prepayment penalty.

      Hopefully those will get your wheels spinning. You might want to talk with a financial advisor as well. Would love to know how you decide!

  109. Jesse says:

    Hi Barbara,

    I actually just applied for the Wells Fargo private student loan. The couple of individuals I spoke with were all very helpful and informative, but they informed me that I wasn’t approved because I did not have a cosigner. My credit score is in the mid 700s, but my monthly income was not enough to outweigh my $34,000 in private loan debt.

    My interest rates range between %9.75 all the way up to %14.75 across four loans. 80 percent of my monthly payment is interest! I don’t feel like there is any “typical” way to handle that kind of loan.

    I would love to give my loan over to Wells Fargo because they’ve been more helpful, but it doesn’t seem to be an option. Is this something that I can’t do anything about without a co-signer? I’m stumped. I don’t have any credit-worthy co-signer at my disposal.

  110. Ashley says:

    I graduated in 2008 and currently owe Sallie Mae $34,000 after taking out Signature Student private loans. My interest rates are 9.25% for three of the loans and 9.75% for two of them. I would like to consolidate all of these into one loan, however I am having trouble finding a lender who will consolidate private loans. Any suggestions?

  111. Michael says:

    Hi Barbara! I have an unsubsidized loan with Sallie Mae for $35.000. When I consolidated my loans several years ago I locked in at a 9.0% interest rate. I know I’m not eligible to consolidate again, and I have used up most of my deferrments. I have looked into the possibility of loan forgiveness, as I am an educator, but my loans are too “old” to qualify. The interest payments alone are killing me and I’m not even touching the principal. Any suggestions?

    • Barbara Raus Barbara says:

      Since this is a federal loan, you may be eligible for various repayment options (income based, graduated repayment, etc.). Talk to your lender about the issues you’re having with your loan payments, and discuss the different repayment options that may be available to you.

  112. Steve says:

    Hello Barbara, I currently owe $26854 on a federal student loan that I had consolidated with sallie mae about 4 years ago. My current interest is 7.25%.I’ve been trying to get that interest rate lowered since I know current interest rates are around 4%. When i contact sallie mae they stated there is nothing they can do for me and that the goverment is incharge of it. I ask why am I still paying them and they can’t give me an answer. Can Wells Fargo help me out on get my intrest rate lowered for my federal loans i consolidated? also why is my payment for my federal loans going to sallie mae?

    • Barbara Raus Barbara says:

      Steve – once you’ve consolidated federal student loans, the interest rate on your consolidation loan is fixed for the life of the loan, so there aren’t options to lower it. What you have is a federal consolidation loan made through the Federal Family Education Loan Program – this program allowed private lenders to make federal student loans. However, after changes in legislation, the FFEL program was eliminated. But there are still students who have federal loans with private lenders who continue to service those loans.

  113. kathy says:

    Have 2 loans – subsidized and unsubsidized at 6 and 6.8% – just seems like in this economy there should be a lower rate – as I read through emails, am I correct in thinking only way is to seek a private loan consolidation. I owe about $9,000. I could get a co-signer if I needed. What would you suggest.

    • Barbara Raus Barbara says:

      Kathy – Federal student loans should not be consolidated with private student loans.. Federal student loans have a number of benefits that private student loans don’t have – like more options to postpone payments if you have trouble repaying. Also remember that while private student loan interest rates may be lower right now they are also variable and may change over time.

  114. Gina says:

    Hi Barbara,
    I understand that once you have consolidated your loan at a fixed interest rate, this will be the interst rate for the life of the loan. Is there any way to change your lender after consolidation without the interest rate being a concern? Of course it’s a concern, but is it at all possible to change lenders after consolidation?
    Thanks,
    Gina

    • Barbara Raus Barbara says:

      Hi Gina – If you’re talking about a federal consolidation loan, there really aren’t options to reconsolidate with another lender. All federal loans are now being made through the Federal Direct Loan Program, so they are the only lender who could make that type of loan. If your loan isn’t already with them, you can reconsolidate into the program to take advantage of some repayment benefits only available through Direct Loans like the public service loan forgiveness program. You’ll want to consider what benefits may exist on your current loan and weigh them against any possible benefits with Direct Loans.

  115. fireonice17 says:

    Dear Barbara,

    I am currently in my senior year in undergrad school as an international student. SInce I could not afford to pay for school, nor could my family I took out private loans through out my undergraduate career to finance tuition and other living expenses. For these loans I used a co-signer (my sisters husband who gets to be a American Citizen). My Private loans before accrued interrest after graduation total 78K and with interest it can hit around the 95 -100k mark. Now I am planning on staying in the US to get a job even it is harder to do so. My parrents are giving me a boost of about 26k towards my student loans. Is it possible for me even being a International Student to consolidate my loans (One is from Wells Fargo, the Other two from Chase Student Loan and one from ACS) with Wells Fargo?

    Thank you

    • Barbara Raus Barbara says:

      fireonice – thanks for commenting. In order to borrow a private consolidation loan from Wells Fargo, you need to be a U.S. citizen or permanent resident alien without conditions. If you check out http://www.finaid.org they offer a list of additional lenders that offer private student loan consolidation.

  116. Brandy says:

    Hi Barbara,

    My husband defaulted on his student loans about seven years ago. Even though he has been in good standing the whole time and been making payments. We can not seem to get ourselves out from under the student loan. The payment is so high and we are only paying the interest. They will not work with us at all. The loan was originally AES but when he defaulted it of course was taken over by Direct Loans. Is there anything we can do to lower the payment. Our options to repay are either $337 – $435 a month. They told us if we make 25 years of payments the loan will be forgiven. That comes out to be 105,000 to pay off a $38,000 student loan. We also have capitalized interest of $9,000 on top of the principal amount. When he defaulted Direct Loans made him consolidate his loans at a 8.0% interest rate. Pleaes let me know if you have any idea on how to pay off this debt. ~thank you

    • Barbara Raus Barbara says:

      Brandy – Unfortunately, there aren’t many options. It sounds like Direct Loans has your husband on the Income Based Repayment program. After 25 years of payments any remaining balance is forgiven. The only thing I could recommend is paying more toward the loan to lower the total amount repaid, but given your situation it doesn’t sound like that’s an option. You could consider some other type of consumer debt (home equity, personal loan, etc., depending on assets) to pay off the loan, but remember that you might not have better terms with that option and you would lose the benefits of a federal student loan.

  117. Amy says:

    HI! My fiance has 50k in private student loans with Sallie Mae. His interest ONLY payment is 450/mos and that is just to keep his account in good standing! He tries to pay 600/mos but at this rate he is barely getting bills paid and is NEVER going to have any savings for his future. He is a chef and does not make a lot of money. I know he can see about refinancing his loans at a lower interest rate, but I’m not sure he will qualify. His total debt is 7K in credit cards. He has an average credit score (not bad),owns his car, is not a home owner, and makes 30k a year. What are his options with NO co-signer? Please advise.

    • Barbara Raus Barbara says:

      Amy – thanks for your question. With private student loans, there are usually only a couple of options for lowering the monthly payments. Your fiancé has already taken one of those steps by making interest-only payments. It’s good that he’s trying to pay more than that amount each month. Another option for him to pursue would be to consolidate his private student loans. It’s quite likely that doing so will require a cosigner, however. He shouldn’t discount securing a cosigner before learning more about it. He can find information on cosigners by visiting wellsfargo.com/student and clicking on the Student Center.

  118. James says:

    Hi Barbara,

    My son has several student loan from the government. (7 distribution in total). 5 distribution is currently on 2.2% and 2 distribution at 6.6%. Is there any way for him to make specific payments towards the 6.6% distribution? He’d like to pay extra payment specific to this distribution so he can reduce the 6.6% loan faster.
    ~Thank You

    • Barbara Raus Barbara says:

      James – are all of his loans through the Direct Loan Program? Best bet would be to contact them (or whichever lender holds the loans) to see how your son could divvy up his payments. It may be split equally between all of his loans, but there may be options to allocate extra payments toward the higher interest rate loans.

  119. Karen says:

    Is there any banks that are consoladateing private student loans?

  120. Jennifer says:

    I graduated in 2005 and immediately consolidated my loans with American Education Services. I have been extremely dissatisfied with the service and would like to switch companies, is that an option? How would I go about transferring my balance to another lender?

    • Barbara Raus Barbara says:

      Jennifer – If you have a federal consolidation loan you could consider consolidating that loan through the Direct Loan program. They are the only ones who can make a new federal consolidation loan. Know that Direct Loans are serviced by other lenders – Affiliated Computer Services, Great Lakes, Nelnet, Pennsylvania Higher Education Assistance Agency, and Sallie Mae.

  121. Dolly Cavanaugh says:

    My son refinanced his student loans 2 years ago and last year the payments have ballooned to $100 more per month. He said student loans can only be refinanced once. Is there any way he can refinance to a lower rate?

    • Barbara Raus Barbara says:

      Dolly – What kind of consolidation did he do? Were they federal student loans? If so, the payments should have been steady throughout, unless he was using a graduated repayment plan where the payments will increase gradually over time. If it’s a private consolidation loan, it likely has a variable interest rate and may have changed over time.

  122. fireonice17 says:

    Barbara, you said I have to be a citizen to be able to consolidate, how about if my co-signer is a citizen. Can he consolidate my loans for me?

    Thank you

    • Barbara Raus Barbara says:

      fireonice – Only the person who is the primary borrower of the loans can initiate the consolidation process. That being said, if a borrower is a citizen or permanent resident alien they may qualify for a private consolidation loan with a U.S. citizen cosigner.

  123. Elissa says:

    Hello Barbara,
    I appreciate your blog. I do have a question for you. I’ve been reviewing my husband’s student loans through Sallie Mae, which he consolidated right out of school 4 years ago. I was exploring the Sallie Mae website and came across a calculator that made me aware we are paying more than $10 a day in interest for $53K worth of loans at varying interest rates. We are working to aggressively pay these down and be out of debt in the next three years, but what I was wondering about was another consolidation step. Is it possible to re-consolidate? Most of our interest rates are in the 7′s and above, so what I’m looking for is a way to pay lower interest. We own a home and have excellent credit, so I was wondering what some of our options might be. Thanks so much.

    • Barbara Raus Barbara says:

      Elissa – it depends on what kind of loan your husband has. If it’s a federal consolidation loan, there aren’t any options on the federal side that would lower interest rates. When you consolidate federal student loans into a federal consolidation loan you lock in a fixed interest rate for the life of the loan and there aren’t options under the federal loan program to re-consolidate. Now , that being said, there are private consolidation loans available. However, moving a federal consolidation loan into a private (i.e. non—federal) consolidation loan should only be pursued after a careful consideration of federal loan program benefits that would not carry forward (e.g. repayment and deferment options under the federal loan program would no longer be available). Also, the interest rate on a private consolidation loan would likely be variable and could fluctuate over time. You’d want to assess your repayment needs, and compare loan options, very carefully with particular attention to the federal benefits that would not carry forward when moving from federal student loan debt to private student loan debt.

  124. Charles says:

    Hi Barbara– I am confused as to why you say a student loan cannot be “refinanced.” As a technical matter, wouldn’t taking out a personal loan and then using the loan proceeds to pay off the student loan be considered “refinancing”? More substantively, though, I don’t understand why banks like WellsFargo aren’t specifically offering refinancing options for student loans. I am not aware of any law preventing it, nor do federal loans carry any pre-payment penalties or covenants against refinancing (that I am aware of). Do you think the banks fear losing the protection of non-dischargeability in bankruptcy? (I haven’t looked at the provision specifically, but I’m sure there is an argument to be made that obvious refinancing of student debt should be treated like originally issued student debt in bankruptcy proceedings.) It seems like it would be a lucrative market for the banks to move into, and it could save us student borrowers quite a bundle now that interest rates are so low.

    • Barbara Raus Barbara says:

      Hi Charles – When folks generally think of refinancing they compare it to how you can get a different interest rate on a current loan – like a mortgage for example. The reason we stray away from that word is because consolidation means taking out a new loan to pay off old ones (or one) – which you are right, does meet the general definition of refinancing. There are a number of borrower benefits to student loans specifically – like potential tax-deductibility of interest and in general lower interest rates than personal loans. With a private consolidation loan a borrower could technically include all student loans (private and federal); however, because federal loans offer a wider range of repayment and deferment options, we recommend borrowers consolidate their federal loans through the Direct Loan program. A federal consolidation loan is a bit different because of the terms the federal government has set up. The interest rate is fixed and is a weighted average of the loans a borrower includes.

    • Ryan says:

      Charles,
      Your comments are correct, and you point out a major problem with student loans. Since a student loan cannot even be discharged through bankruptcy, it is one of the safest forms of debt a bank can buy. It is collateralized by the future earnings of a person thier entire life. This is far safer than risky assets such as mortgages or auto loans. It is unfortunate that banks don’t capitalize on this. A bank could make a fortune by selling mortgages and buying student loans. 30 Yr fixed rated mortgages are yielding about 4.75% now, I would expect to see similar student loans at less than that. Some hedge fund will figure it!

  125. Amber says:

    Hi Barbara,
    Excellent post. I am currently doing my residency and paying on 1 of 2 loans. I have a private loan of $195,000 at at 7%(Currently Paying on this on) and a Fed loan of about $50,000(deferred). I think that 7% seems pretty high especially on $195,000 and I know you talk about seeing if my credit has gone up as one solution. But any other solutions? The company I am paying on now says that they are no longer issuing loans and Im not to sure how or where I can look to lower this payment. They also told me that because it is a private loan I can’t consolidate it. I am a little confused on what to do and I would appreciate your guidance. Thank you s much.

    • Barbara Raus Barbara says:

      Hi Amber – Couple things to clarify your situation. You can consolidate a private student loan; you just can’t consolidate it through a federal consolidation loan. However, some lenders (Wells Fargo included) offer a private consolidation loan, which borrowers can use to combine private student loans or to try to receive different terms on one student loan. The other thing to think about is adding a cosigner with a good credit history to a consolidation loan application. Cosigners can sometimes better the terms for which an applicant qualifies.

  126. Chris says:

    Regarding a private student loan, are the fixed-rate loans truly fixed? So many of them are LIBOR+5.00% (for example). Does this mean that your monthly interest rates will be the LIBOR in effect the day you sign the loan + 5.00% for the entire life of the loan? Thanks.

    • Barbara Raus Barbara says:

      Hi Chris – An index like LIBOR or Prime Rate is used to price variable interest rate loans. Variable interest rates change whenever the index changes. Lenders generally set fixed interest rates independently of any index. Now, the lender may choose to change the fixed rates they offer from time to time, but once you receive your rate it will remain the same throughout the life of the loan. Think about the fixed option kind of like a fixed-rate mortgage – the rates can fluctuate, however once you’ve locked in your rate, that’s the rate you will have for the life of the loan. So, yes, the fixed-rate loans are the same throughout the life of the loan.

  127. Anonymous says:

    I am 39 y/o I have old student loans over 15 y/o and want to go back to school how do I find and consolidate my loans?

    • Barbara Raus Barbara says:

      Anonymous – Do you know which lenders hold your loans? If you’re looking to find your federal student loans there is a national database (NSLDS: http://www.nslds.ed.gov/nslds_SA/) where you can search for where your loans are located. Private student loans are a different story if you have any of those. If you’re interested in consolidating federal student loans, you’ll need to go through the Direct Loan program (http://www.loanconsolidation.ed.gov/). Private student loans can also be consolidated through a private student lender like Wells Fargo. Please let us know if you have more questions as you investigate your options.

  128. Bill Smith says:

    Barbara,

    Reading the first entry in your blog, I had a thought I’d like to contribute. As a co-signer on my son’s student loan, it had occurred to me that if he should die unexpectedly, I would be left as the payer on any balance of his loan. My wife and I therefore decided to take out term life insurance for him to cover his loan. Typically, term policies for someone in their early twenties are very low. While it is an additional expense to be considered in the cost of servicing the loan, the cost is so minimal and the peace of mind so great I’d heartily recommend it to any parental co-signer. While we were at it, I took out an additional term policy on myself to help pay off the loan. Frankly, if I were Wells Fargo, I’d consider making such a term policy part of the conditions of a student loan much the same way PMI is automatically charged for a mortgage with a limited amount of equity…

  129. William says:

    Hello Barbara, Thank you for this blog! I presently have a consolidated student loan for $125,000 with Sallie Mae at 5.625%. I pay my monthly loan payments on time each month. I would like to move my loan away from Sallie Mae for two reasons: (1) Hopefully I could lower my interest rate and monthly payment, and (2) I’ve heard horror stories about Sallie Mae for those that encounter financial problems. Any advice on whether it would be wise to leave Sallie Mae and any suggestions as to where I could take my loan? Thanks, Barbara. William

    • Barbara Raus Barbara says:

      Hey William – Are you dealing with a federal consolidation loan or a private consolidation loan. If you’re talking about a federal loan there aren’t many options for you. You could reconsolidate through the Direct Loan program, but that may end up increasing your interest rate. However, you would be with a different lender. If it’s a private consolidation loan it’s a different story. The thing you need to be aware of there is that some lenders might have a restriction on how much debt you can consolidate and the amount you have may be over that limit. You didn’t mention whether the 5.625% rate is a fixed or variable rate, but if your loan with Sallie Mae has a fixed APR, it might take some effort to find another lender that offers a fixed APR – or a variable APR that can compete with 5.625%.

  130. Jenn says:

    Barbara,
    My husbands father took out a federal parent loan. He filed for bankruptcy but the attorney did not even attempt to dismiss the loan because that is too hard to do. He currently does not make close enough to pay off every day bills and the student loan (he is under water without the loan), so my husband and I make the 200+ payment a month. Also, he consolidated the loan before my husband was out of college. I have two questions 1. Because the loan is in his name, he is supposed to be able to claim the interest on his taxes, but legally he cant because he is not the one paying for it. Any suggestions? 2. Is there anything we can do to help him get from under the student loan since he can not pay for it? We have looked at the different options but the payments will not change enough where he would be able to pay.

    • Barbara Raus Barbara says:

      Jenn – Sorry to hear about your situation. Federal student loans are not automatically discharged in bankruptcy. The person filing the bankruptcy has to prove it would be an “undue hardship” to continue making the payment. As for deducting the interest that was paid on the loan on your taxes, your best option is to consult a tax advisor. Someone who specializes in tax information can let you know if there are any options available to you or your father-in-law. The best way for you to reduce the debt to a more manageable amount for him is to pay more than is required. Because there is no prepayment penalty any extra you are able to pay will chip away at the principal amount, reducing the amount of interest over the life of the loan. You could also consider using a different type of consumer credit to pay off part of the loan, lowering the amount he has left to pay.

  131. Lehi says:

    Hi, Barbara
    I’ve been recently trying to get a better understanding about repaying loans. I have a loan with Sallie Mae for $13,248.80 at 9.25% from 2007 when I was 18 (which I started paying even before I graduated school back then and it seems like it’s not going down even when I paid 2-3 times the minimum for a while… I also have a Stafford Loan with ACS of $14,279.38 @ 6.80% fixed, which becomes $20, 031.22 (projected total amount to be paid with interest during repayment)to start in June –I understand that the Federal loan is a fixed rate and can’t be lowered, but what about the Sallie Mae one? Will it be better to get another loan from somewhere else with a lower rate (somehow; I don’t know which company either) to pay that off? I want to continue going to school but I don’t want to rack up anymore loans at the moment. Thank you for your time. Maybe you can give me advice.

    • Caroline Hanson Caroline says:

      Hi Lehi – Thanks for your comment! While Barbara is out, let me see if I can help answer your questions. Regarding your Sallie Mae student loan, you may be able to lower your interest rate through private student loan consolidation. (Wells Fargo is one of the lenders that offers a private consolidation loan.) It’s important to note that consolidation can extend your payment term, which means that if you take the full time to pay it off, you’ll actually be paying more in the long run. However, if you wanted to try to lower your interest rate through consolidation, then make more than the monthly minimum payment to reduce the time it takes to pay off your loan, you may be able to achieve your goal. To your other point about wanting to continue school, you may want to consider whether your employer (or future employer) offers a tuition reimbursement program—it’s one good way to continue your education while earning money and gaining experience at the same time. Hope that helps! Let us know if you have any more questions.

  132. Maria says:

    Hi: What is your opinion on the “Parent Plus” loans that most colleges are pushing, suggesting that it’s better for the student by not leaving them with a substantial financial burden after graduation?

    • Barbara Raus Barbara says:

      Hi Maria – There are a number of options for parents who want to help a student pay for their education. Some like the Federal PLUS loan or private loans for parents are loans in the parent’s name. It’s different than being a cosigner for a private student loan. There are pros and cons to all of the options parents have (including home equity, retirement savings, etc.). I’d like to take some time to talk about all the options in more detail so you get a broader view. Stay tuned for an upcoming post on parent options.

  133. Simone says:

    Hello, Barbara–

    This blog has been incredibly helpful as I think through options with my student loans. I hope that you might be able to provide some insight on this specific question?

    I have about $40,000 in Stafford loans (subsidized and unsubsidized) that I took out during graduate school at the fixed rate of 6.8%. I pay on-time and am currently receiving a .5% discount for using auto-payment. While filing this year’s tax return, I realized just how much money I am paying to interest alone — not even getting at the principal.

    I am looking to lower the interest rate on these federal loans, but when I research federal loan consolidation the benefits don’t seem to add up: decreasing the number of payments I make each month is not my end goal; I really want to lower my interest rate!

    I have private student loans at the much lower rate of 2.25% and can’t believe that I agreed to such a high federal rate. Ugh!

    Is it possible to take out a private loan to pay off higher federal student loans? Do banks such as Wells Fargo offer such options? I’d appreciate any insight you could provide.

    • Barbara Raus Barbara says:

      Simone – you could take out another type of consumer credit (like a private consolidation loan) to pay off your federal debt, however you’d want to weigh this option very carefully. Generally, it’s recommended that you keep your federal and private student loans separate. If you did pay off your federal student loans with another type of consumer credit, you’d lose any benefits of a federal student loan (like the subsidy if you need to defer your payment and the deferment options themselves) and there is no guarantee that your interest rate would be lower. Also, the interest rate would likely be variable and could change over time whereas your current federal loans won’t change.

  134. Marie says:

    I have a direct loans consolidation loan and then a private student loan from years later. Is there anyw ay to consolidate the two so i only have one payment to make a month? Thanks

    • Barbara Raus Barbara says:

      Marie – You could combine your federal loans and private loan with a private consolidation loan, however it’s recommended that you keep them separate. Here’s why: Federal loans have certain benefits that most private student loans don’t. If you were to take out a new private consolidation loan to pay off your current loans and have only one payment a month, you’d lose any benefits of a federal student loan. Also, you likely have a fixed interest rate on your current federal consolidation loan. If you were to use a private consolidation loan, the rate would likely be variable and could change over time. Also remember that private student loans are based on credit and your interest rate would depend on that.

  135. Andy says:

    I am still in graduate school and currently pay $120 each month toward early repayment of my loans ($60 for each). My original balance for a Stafford subsidized loan was $8,500 (now at $7,033) and for a Stafford unsubsidized loan was $6,000 (now at $5,276). I still have several years in graduate school, want to keep making early payments and paying off interest as I go, but how can I get these paid off faster and more efficiently? Any suggestions?

    • Barbara Raus Barbara says:

      Andy – First off, awesome job managing your loans. One of the smartest things a borrower can do is make payments while they are still in school to chip away at accrued interest and principal. Especially since interest is capitalized and charged interest once you enter repayment. Have you contacted your lender to see if there are any automatic payment options while you are still in school?

  136. Austin says:

    I had perfect credit all through college, once I graduated Great Lakes messed up a forbearance and did not send me past due notices for the 6 months i was suppose to be under forbearance, which in turn caused my credit score to crash! I am a graduate with a B.S. and still out of work. I have consolidated all my loans except for one loan I am not allowed to consolidate. My question is can i still refinance through Wells Fargo for a lower monthly payment, if my credit score is low?

    • Barbara Raus Barbara says:

      Austin – if you were to refinance with a private consolidation loan, the loan would be based on credit, so your interest rate and payments would depend on the credit of you and your cosigner (if you chose to apply with one.) Depending on what type of loans you have consolidated (federal or private) it might not make sense to consolidate again through a private consolidation loan. Federal loans have a number of benefits that you’d need to weigh carefully when you consider your options. You may also want to consider other repayment options. If you have a federal consolidation loan consider income based repayment.

  137. Sarah says:

    Hi Barbara. I have a large private student loan that has been consolidated at a rate of 8.5%. Is it possible to refinance a private student loan to get a lower interest rate? I currently have a credit rate in the high 700′s. Thanks!

    • Barbara Raus Barbara says:

      Hi Sarah – You can try refinancing to see if you could get better terms on a new private consolidation loan. You’d have to apply to see what type of rate you would be offered. Remember, also, that if you apply with a cosigner who has good credit you may increase your chances of better terms.

  138. Jocelyn says:

    A few years ago, I took out a loan through Lehman Brothers, who switched my loan over to Wells Fargo. I was wondering, is there any way I can increase that loan instead of taking out another?

    • Barbara Raus Barbara says:

      Hi Jocelyn – Generally you’d need to apply for a new loan for each year of college. Student loans are closed-end loans so a fixed amount is lent to the borrower, unlike open-ended loans like revolving credit (credit cards) or lines of credit, that can be increased to meet a borrower’s needs. If you need an additional private education loan, you would need take out a new one. However, if you want to have just one loan at the end of borrowing you can consolidate those loans together – there are federal consolidation loans and consolidation loans for private student loans.

  139. Sunny says:

    Hi, I was wondering if I could have some advice. Currently I owe 15k on my student loan and the last year I paid off 3K off it however I lost my job and have been on unemployment for 6 months. My loan is with Wells Fargo and I simply can’t afford to make the full payment of $350 a month. I got a roommate and have been living as frugally as possible but the most I can pay is $130 at best barring I don’t have a high power bill. Is there any advice you can give me. I have been sending out job applications everyday like it is a full time job.

    • Barbara Raus Barbara says:

      @ Sunny – Best thing to do would be to call one of our student loan specialists. They’ll be able to pull your account details and talk through any possible solutions to lower your payments. You can reach them at 1-877-412-5321.

  140. Jennifer says:

    Dear Barbara,
    I appreciate your blog and the advice you provide. I have unsubsidized private law student loans (Law Access Loans) from 1991-1994. The loans were originally serviced by EduServ Technologies. EduServ sold the loans to Sallie Mae in 1998. In reviewing my original loans, as well as payment history, I believe that EduServ utilized the wrong variable interest rate to capitalize interest during the time that I was in school. As a result, the balance including the capitalized interest, at the time Sallie Mae purchased the loans was incorrect. I believe that a subsequent purchaser of a promissory note is responsible to ensure that the balance is computed correctly from the commencement of the note. What is the best way to correct the balance and computation of interest over the life of this student loan debt?

    • Barbara Raus Barbara says:

      Hi Jennifer – Thanks for commenting. You’ll want to go back to EduServ and request a payment history and interest history. With that information you’ll be able to see any errors and should be able to work with the current holder to resolve the issue.

  141. Jim says:

    Hello. My daughter financed her education through SallieMae. She consolidated after graduating and I cosigned. The reps at SallieMae told us when we consolidated that I could be removed as cosigner after she made on time payments for 24 consecutive months. She has been making payments for 36 months never missing a payment and never late. They, SallieMae, will not release me as the cosigner and are using the dispursement dates of the loans an excuse. I don’t understand what the dispursement dates of the loan have to do with the inability to release the cosigner and can’t get an answer from SallieMae. Anyone familiar with this? She would like to refinance the loans again without a cosigner for two reasons…prevent them from appearing on my credit report, and more importantly, stop dealing with SallieMae. They are extremely difficult to deal with, and in my opinion, are somewhat deceptive. Is there anyone out there who has found a lender that is easier to work with? We are not sure if she can refinace the loans or must she obtain a new, private loan and start from scratch? Thanks.

  142. Nick says:

    Hi Barbara,

    I have a $110,000 private consolidated student loan at a fixed interest rate of 10%.

    I am trying to find out a way to refinance this loan to get a “lower interest rate”.

    Do you have any advise on how this can be done? I have looked at other banks that offer variable consolidation starting at 4%-6% but I don’t know if that is safe.

  143. Derek King says:

    Hi Barbara, I am currently getting ready to go into my Junior year and I have two 10,000 dollar student loans from Sallie Mae where you pay the interest while your in school. My parents said that they would help me to pay these monthly bills while in school however, money has got tight and we would really like to defer payments until i graduate. Is that something that i can do with th loans I already have?

    Thanks, Derek

    • Barbara Raus Barbara says:

      Hi Derek – Unfortunately, what you’d need to do is consolidate these loans into a new loan to pay them off and not have the requirement of in-school interest payments. However, a consolidation loan usually requires immediate repayment, so that wouldn’t solve your problem. If you are currently paying for other school or living expenses out of pocket (for your current term), you could borrow a loan that did not require in-school payments to cover those and use the cash you’d be freeing up to pay your in-school interest payments required on your current loans.

  144. LARRY says:

    ARE THEIR ANY LOAN PRODUCTS FOR CREDIT CHALLENGED GRADUATE PROGRAM STUDENT?

    • Barbara Raus Barbara says:

      Hi Larry – Depending on the credit situation of the borrower, applying with a cosigner for a private student loan may help when the primary borrower does not have good credit. However, there are situations when the primary borrower’s credit disqualifies them from the loan even with a cosigner. In those situations, if someone is willing to borrow a loan in their own name to cover the student’s costs this loan may be an option: https://www.wellsfargo.com/student/loans/parent/privatestudentloans

  145. LB says:

    Hi Barbara,

    I’m starting pharmacy school in the fall and I need some advice. I just applied for a $20000 private loan with Sallie Mae for living expenses. My credit score is 715 and I don’t understand why I got an interest rate of 8%. I only qualify for $21000 in student loans and I need about $10000 in living expenses. Should I shop around for a better interest rate? I could also get a grad plus loan, but it would only be for the total cost of school and no living expenses. Also, how do I get a fixed interest rate with Sallie Mae instead of variable, does Wells Fargo offer something different?

  146. Loan Shark says:

    Hi Barbara, thanks for all of your help. I owe $50,000 through Federal Direct. I consolidated my loans and signed up through Direct a few yrs ago and my int rate is fixed at 6.75%. My friend has an interest rate through Sallie Mae of somewhere around 3%. I aggressively pay around $1,000/month on my loan and would kill for a lower rate. Can I refinance through someone else or am I forever stuck at that rate? I don’t qualify for IC or IB payments, nor will I receive loan forgiveness through public service. Please help!

    • Barbara Raus Barbara says:

      Hey Loan Shark – First off I commend you for taking some awesome initiative to pay off your loans. Now, remember that you and your friend probably have different student loans. You have a fixed rate, and your friend’s rate around 3% is probably not fixed and could change. You also have a federal loan which has certain benefits. If you’re looking mainly to get a lower rate, you could try to consolidate through a private consolidation loan. This isn’t a solution that we recommend, however, because you’d be losing those federal student loan repayment options. Also, a private consolidation loan would be based on your credit, and there’s no guarantee that the rate would be lower.

  147. Matt says:

    Hi Barbara – In May 2011 I consolidated my Wells Fargo student loan without a cosignor when the balance was about $48k. My consolidated interest rate is now 6%.

    I’m content with the rate now, however the rate is variable and could increase at any given time.

    I have good credit and a fairly high-paying job for a 2010 graduate, but I have savings and investment goals that my loans will interfere with if the US prime rate were to increase.

    The balance of my loan is now around $37k as I’ve paid a large, lump-sum. Is there anything I can do to obtain a more favorable or fixed rate now that my income/debt ratio is higher and presumably, my credit is better?

  148. Haley says:

    Hi Barbara, My husband has student loans and I feel like we will never pay them off!!
    about 15,000 is with Nelnet (fixed at 3.75-Great!) But he also has one with Sallie Mae, which is at 9.25% and 15,589 left. The kind of loan is listed below.

    Private Consolidation – UNSUB /
    SLM PRIVATE CREDIT STUDENT LN TR

    Are there any options for me to try to have the loan placed with someone else for a lower rate? I can admit when he got the one with Sallie Mae his credit was not at its best! Since then we have bought a house and have significantly brought up his credit. All payments with Sallie Mae have been paid on time since 2007!! as well as house notes..ect. The loan started at 18 something, and for 4 years we have not even put a dent into it. I feel helpless!

    Any info would be greatly appreciated!

    Thanks!

  149. bob says:

    Hi Barbara-
    Great Blog you have going here. Lots of info. My wife and I are both in public service; nurse and teacher respectively. Our loans were once through direct loans, but then consolidated through SallieMae. Will we have any eligiblility to qualify for the loan forgiveness program after 10 years from 10/1/2007? If not, would we be able to transfer our loans back into direct loans to get the forgiveness clock ticking?

  150. Mike Van der Gaag says:

    My daughter is about to start her sophomore year. She is borrowing for the first semester. She has a choice between variable at 6.49% and fixed at 10.74%. It seems like such a gamble. How does one decide between fixed and variable interest rate?

  151. Karina says:

    Hi Barbara! What a wonderful and helpful blog! Thank you so much for answering so many questions regarding student loans.

    I have a question as well. I’ve heard that there are some new regulations regarding student loans, and would like to know if there is anything my husband can benefit from. He has two student loans with Sallie Mae, which has already been refinanced once (and from what I understand, he can only do that one time). Is there any way he can get a better rate? We pay each and every month, but the principal goes down really slowly. Or, if we pay the total balance, is there any chance for a discount or that doesn’t happen with student loans? Thank you very much!

    • Barbara Raus Barbara says:

      Hi Karina – It depends on what type of loans you have. Federal consolidation can only happen once, but you can reconsolidate a private student loan. Wells Fargo does offer a private consolidation loan that allows you to consolidate loans from other lenders—even private consolidation loans. Our loan specialists can help you learn whether you can get a better rate by reconsolidating with Wells Fargo. You can contact us at 1-800-658-3567.

  152. Anonymous says:

    If you loan was consolidated prior to 2006 (mine was consolidated in 2004), can I refinance that federal loan?

    • Barbara Raus Barbara says:

      Anonymous – the only way you can reconsolidate a federal consolidation loan into a new federal consolidation loan is if you have taken out new federal student loans after you consolidated or have some loans that you initially did not include that you’d like to include in a new federal consolidation loan.

  153. Mark says:

    I have some student loans from Sallie Mae and from what I remember, I have to pay for the full interest no matter what. Here’s an example of what I thought it meant, I have a loan of $100,000 with interest rate of 10% for a 60 month term. The monthly payment based on tvm would be $2,124.70, multiply that by the 60 month term, you get a total financed amount of $127,482.27 giving you an interest amount of $27,482.27. If I pay this early, lets say a year after I signed the loan, I still have to pay the entire $127,482.27 correct?

    The reason for this question is if I have to pay that amount, wouldn’t consolidating the loan do the same? they’ll be paying the full $127,482.27 and then re-spreading the loan into a longer term, maybe instead of 60 months, it will be 120 months making your monthly payments lower and even lower rate but your still paying interest on interest? Or is this not how it works?

    • Barbara Raus Barbara says:

      Mark – student loans generally don’t have a prepayment penalty, so when you consolidate, you are paying off what you owe currently and then getting a new loan with different terms (like your interest rate and repayment period).

  154. Brooke says:

    Hello,
    My husband currently has $91K in private student loans from law school. The interest rate is fixed at 9%. Do you know of any way we can get it lower? A credit union offered to add $10k to our current car loan at 4.99%, but we don’t know if that’s a good idea. We haven’t been able to progress because of this debt hanging over our heads.
    Thanks.

    • Barbara Raus Barbara says:

      Consolidating your private student loan debt may be option. You might be able to lower your rate and/or extend your payment period to lower your monthly payments. Wells Fargo does offer a private consolidation loan, you can call to speak to a representative about it at 1-800-658-3567.

  155. Chad says:

    I am in repayment for over years now on two loans with sallie mae. One Federal and One Private. I am looking for advise on Consolidation. My payments are getting hard to keep up with and I have 11 years left to pay on the loans. Any advise/information on how to proactively source for consolidation is helpful. Thanks in advance

    • Barbara Raus Barbara says:

      Hi Chad – On the federal side, you may want to see if an extended repayment plan is an option for you. That would help you extend the repayment term, which may provide you some monthly payment relief. Consolidating just one federal loan into a Federal Consolidation Loan wouldn’t provide any kind of interest rate lowering because the new interest rate is your current rate, rounded up to the nearest one-eighth of 1%, capped at 8.25%. For your private student loan, private consolidation is an option. Since this type of loan is based on credit, you may be able to find better terms if your credit situation has improved since you took out your loan or if you bring on a cosigner with good credit.

  156. Rachel says:

    I have a student loan with Great Lakes for about $10,000 at 6.8% interest. Can I try to transfer this loan to another institution to try to reduce my interest rate?

    • Barbara Raus Barbara says:

      Rachel – based on the interest rate you quoted it sounds like you probably have a federal student loan. If that’s the case, there are a number of benefits, like options for deferment and repayment plans, etc. that you would lose if you decided to try for a lower interest rate by using another consumer credit option – like a private student consolidation loan. It’s not something that we would condone you doing.

  157. Vickie says:

    I have a student loan with Bank of America for about 14K with a interest rate of 5.375% fixed. I consolidated the loan once I graduated from college. I usually pay a little bit more then the payment but never have a option how much I can put on the principle. Do they automatically put the extra in the principle?

    I recently saw an ad on Wellsfargo about student loan and able to lower the interest rate if we have a saving/checking account at Wells Fargo. I personally do have accounts in wells fargo and I wonder if I can transfer the loan and lower my rate. Thanks!

    • Barbara Raus Barbara says:

      Vickie – Payments are generally applied like this: First to the payment due, then to any outstanding interest, then to the principal balance. Also remember that at any time you can make an extra payment to your principal balance. The private consolidation loan with Wells Fargo does offer a benefit to folks who have certain accounts with Wells Fargo when they apply for the loan.

  158. Lane says:

    I have seven Sallie Mae loans. They total approx $40,000.00. Went to a private College for 2 year business degree. Could not get a job( was in another state) and could not finish. For over two years could not get anything but a 12 hour a week job. I have finely landed an almost full time employment. I am being hounded day and night for payment. I want to repay but the loans are at an average of 11 1/2 % and about $500.00 per month. Since I’m only making around $1000.00 per month is there a way to get one loan at approx. $200.00 per. I have bad credit and would have been homeless if I had not been lucky to have family. I am only 22 years old and trying to do what is right. My parents are older and in a low income bracket. that is why the loan is only on me. Is there any way for help for me.

    • Barbara Raus Barbara says:

      Lane – Have you looked into private student loan consolidation? If you are able to get a cosigner with good credit you may be able to take out a new loan with better terms than what you currently have.

  159. Amanda says:

    Hello Barbara,

    My husband has a very high interest rate on his school loans. He joined the military but chose to take the GI bill over the repayment pay so he can go to graduate school after the military. Can be get his loan rate reduced? I know they reduce credit card rates for military but for loans?

    • Barbara Raus Barbara says:

      Amanda – If your husband has federally guaranteed student loans (FFELP or Direct Lending), he can ask to have the interest rate reduced to 6% through his lender. The request must be in writing and must include a copy of his military orders. If your husband has private student loans, his lender needs a copy of his military orders to provide the 6% interest rate benefit. All loans must have been taken out prior to when he entered military service to get the reduction in interest rate.

  160. Brian says:

    Barbara one thing a loan holder with Sallie Mae can do to lower payments with free money is to use UPromise. I have my daughters Upromise account set up as such. I use a Upromise credit card to pay all my utilities and retail purchases earning 1% on the dollar. You can earn double or more by using the Upromise online shopping site. Anyway, my Upromise account gets swept every month into my daughters account (about $25 to $30 a month). My daughters upromise account is attached to her Sallie Mae loan account and every qtr her account is swepted and paid on her loan. Her Sallie Mae loan is interest only so 4 times a year approx. $100 gets paid on her loan and it’s just before the interest only payment is made. So basically her loan principle is being reduced 4 times a year. Additionally, I have 4 relatives sweeping free money into her account also. She’s a second year student and her Principle has dropped almost $2500.

  161. Charles says:

    I am looking to consolidate 3 MEFA loans (Mass state loan program) and I can’t find anything online about how to do so. It appears that state secured loans are exempt from the federal loan consolidation programs, but is there any way for me to work something that could have a lower interest rate or extended period? Thanks.

  162. Rory says:

    Hi Barbara,

    I have about $26k in undergraduate loans (subsidized and unsubsidized staffords). I refinanced them a number of years ago (late 2004?)at 3.5%.

    In 2009 I returned to graduate school and the (also stafford) loans were deferred for the duration. I recently graduated from this program with an additional $25k at 8.25% through WF/Wachovia.

    My questions is this – Would it be of any benefit to me to consolodate the recent loans with the older ones, or would that adversly affect the extremely low interest rate on the undergraduate loans?

    I’ve still got 6 months of deferrment on the graduate loans to figure this out. Currently, my monthly repayment is just above $200. I have a long history of overpaying minimum payments in order to pay at the principle more quickly and plan on doing that again, but am not sure if I’d end up paying more with one or two loans.

    • Barbara Raus Barbara says:

      Rory – I’m assuming that the graduate school loans were the PLUS loan for graduate students, which is also a federal loan. If you were to consolidate all your federal loans together, the interest rate would be the weighted average of all the loans you include. So you could see the lower interest rate rise. I’d recommend calculating what the total interest paid looks like in each scenario. Here’s some information on calculating the interest rate if you were to reconsolidate: http://www.loanconsolidation.ed.gov/help/rate.html. I’d use the numbers you get there and your current numbers to compare payments and total interest via a calculator like this one: http://www.finaid.org/calculators/loanpayments.phtml. Let us know if you have more questions after doing that. And BTW, props to you for paying more than is required! :)

  163. Blaine R. Foels says:

    I graduate June 2011 and my loans will come out of grace period in December 2011; I want to consolidate all of my loans for the CHEAPESt INTEREST RATE POSSIBLE. How do I do this and WHO do I contact? Please advise ASAP

    • Barbara Raus Barbara says:

      Blaine – First off, I’d suggest that you take a step back and list out all the different loans you’re dealing with and the terms and benefits of each. For some loans, you may find that it makes more sense not to consolidate. For example, if you have federal student loans with a fixed rate it may not make sense to consolidate them with a federal consolidation loan as it wouldn’t lower your interest rate. However, any private student loans you have are based on credit. A private consolidation loan could be used to pay off any loans you’d like to include. Depending on your credit situation and whether or not you bring on a cosigner with good credit, you may find that consolidating gets you better terms, including interest rate. You can see the private consolidation option from Wells Fargo here: https://www.wellsfargo.com/student/consolidateloans/privatestudentloans. Remember though that by consolidating you generally extend the repayment term, which can mean paying more interest over time if you pay only the monthly minimum.

  164. Jim Sprouse says:

    I have a Sallie Mae loan that we have paid on for 12 years and still owe 40,000. we consolidated about 10 years ago. I have 2 questions: does the new government student loan plan allow me to lower my rate? it is fixed at 8%? will my loans be forgiven after we have paid on them for 20yrs or 25yr?

    • Barbara Raus Barbara says:

      Hi Jim – It sounds like you’re talking about a federal consolidation loan. Unfortunately once a borrower consolidates federal student loans there aren’t really options to lower that interest rate. To try to do that, you’d have to consider paying off your loan with another type of consumer credit, however there are a number a variables with that situation and it’s not something we would recommend. Now, the second part of your question depends. Are you currently repaying under the Income Based Repayment program? It’s through that program that the remainder of the federal loan balance is forgiven after a certain number of years. Right now, the forgiveness happens after 25 years for borrowers who have been in the IBR plan at some time during the repayment period who aren’t in public service. Check out IBRInfo.org for more details.

  165. RS says:

    Hi,
    I have just entered my repayment of my student loans and really need to make my monthly repayment amount lower. I am really confused with all the options. I have federal and private loans through 2 different providers. What is the best way to go about making my payment amounts less without majorly increasing my overall payment amount. Does it make sense to consolidate? Also, how do I go about refinancing where possible! Thanks

    • Barbara Raus Barbara says:

      Hi RS – thanks for your question. Loan consolidation can often be a good option for lowering your monthly student loan payments. If you choose to consolidate, we don’t recommend you consolidate your federal and private student loans together into a private consolidation loan. For your private student loans you’ll need to go through a private student loan lender. Wells Fargo is one of the few lenders to offer private student loan consolidation, even if your loans are from another lender. To learn more about consolidating your private student loans, call us at 1-800-658-3567. To consolidate your federal student loans, visit http://www.loanconsolidation.ed.gov.

  166. Carly says:

    I appreciate all the helpful information. I am thinking about consolidating my private loans but i want to know what is better. fixed rate or unfixed. unfixed seems to be lower but what is the chance of it going up and how high. If it does could i change to fixed rate?

  167. Flower says:

    Hello-
    After reading posting after posting, I truly feel I’ve gained some knowledge but I’m still confused. I recently graduated from a 4 year university in California and I have 4 loans through Direct Loans and 4 through Chase Student Loans. The loans through Direct can be consolidated, however, I don’t know what to do about my private student loans. The loans through Chase have a variable interest rate and I am unsure if I can consolidate them with my other loans? What can I do? Is consolidating with my other loans possible?
    How can I lower my interest rate with Chase?

    • Barbara Raus Barbara says:

      Flower – So, you’re dealing with two types of student loans, federal and private. There are different consolidation options for each, but they shouldn’t be consolidated together. The federal ones can be consolidated however if you’ve already got fixed interest rates on those, the only benefit would be lengthening your repayment term if you’re looking for a lower monthly payment. Now, when it comes to your private student loans, you can consolidate those (Wells Fargo offers a private consolidation loan). Essentially what you’re doing there is paying off the old private student loans and getting a new loan with new terms and a new interest rate based on your (and your potential cosigner’s) credit. One good thing about consolidating private student loans is that if your credit situation has gotten better or if you bring on a cosigner with good credit, you may get better terms and end up lowering your interest rate and/or the monthly payment.

  168. jeff says:

    I have about 58K of federal student loans that I consolidated a few years back at 6.9% Is there any way I can refi the rates or get the payment lower?

    • Barbara Raus Barbara says:

      Hi jeff – When it comes to federal consolidation, there aren’t really options to refinance at a lower rate. You could consider using some other type of consumer credit to pay off your current loan; however you’d end up losing the benefits of the federal student loan (repayment and deferment options, etc.). Also there is no guarantee you could find an interest rate lower that what you currently have.

  169. Marion says:

    Hello, I have about $42,000 in grad school student loan debt, all through the William D. Ford Federal Direct Loan Program. My interest rate is 6.8%. All of these loans were disbursed 2006-2008. The last loan was disbursed 8/12/2008. Would it be possible for me to get the 6.0% interest rate described in the CCRAA on this loan? It is a direct subsidized loan in the amount of $4,338.57. I know that it is not a large percentage of my total loan debt, but any interest rate decrease would help!
    Thank you very much for your time!

    • Barbara Raus Barbara says:

      Hi Marion – You’re dealing with fixed interest rate loans. The lower rate is on loans that were originated after the College Cost Reduction and Access Act legislation that you mentioned was enacted and wouldn’t apply to your loans. If you were looking for some monthly payment relief I’d suggest you consider Income Based Repayment, but judging from your question it sounds like you’re just looking to reduce the total amount of interest you pay over time. If that is the case, you could always consider paying more than your monthly required payment, which would reduce the total amount of interest you paid over time.

  170. Brielle says:

    If I have a private student loan through Sallie Mae and was 17 when I signed (with a co-signer, if I default on the payment, who do they go after – me or the cosigner, or both? Also, was it legal for me to sign for this loan being that I was a minor?

    • Barbara Raus Barbara says:

      Hi Brielle – Generally speaking, and it may vary by lender, if you were to default on the payment it would affect both you and the cosigner as you are both equally responsible for the loan. For some types of credit – like a student loan or auto loan for example – minors are legally able to enter into the agreement provided that they have a cosigner.

  171. Mia says:

    I have a Sallie Mae private loan of 18k including interest. The interest is 10.75% My monthly is 283.00. I have other loans as well. But this one particularly cannot be consolidated nor lower the interest rate. I was told by sallie Mae rep because it is a private loan therefore nothing can be done. What are my options in lowering this payment?

    • Barbara Raus Barbara says:

      Hi Mia – There is an option, private student loan consolidation; however there aren’t many lenders who are offer it. Private student loan consolidation allows you to take out a new loan with new terms, possibly a lower interest rate. Wells Fargo does offer this option and you can learn more about it at https://www.wellsfargo.com/student/consolidateloans/privatestudentloans. Essentially what this option allows you to do is pay off your old loan with that new loan. Depending on your credit situation, you may qualify for better terms and may end up lowering your monthly payment. You can also apply with a cosigner on this type of loan which may help you get better terms.

  172. Anne says:

    I have student loans in the following amounts and interest rates: $38K of a private student loan (at 2%); $15K of subsidized stafford federal loans (at 6.5%); $25K of unsubsidized stafford federal loans (I can’t remember the interest rate, I think also 6.5%); and $45K of GradPlus federal loans (at 8.5%).

    I really wish someone had told me, before law school, to take out private loans instead of GradPlus/Stafford. I figured going with the government loans would be the best option, and did not even investigate private loans my first two years. But because my credit was good, my private loans for my third year of school are only 2%!!!! I am out of school now and in repayment. Is there any way to get a new private loan/consolidation to pay off my 8.5% GradPlus loans and end up with a lower interest rate?

    • Barbara Raus Barbara says:

      Anne – First off, way to rock your credit! Now, you could use a private student consolidation loan to try for a lower rate, but it’s not something we generally recommend. You would lose a number of benefits on the federal loan, like repayment and deferment options. However, if you weigh those pros/cons you may decide the lower rate is something you’d prefer over the repayment and deferment options. Here’s the private consolidation loan option with Wells Fargo for you to compare: https://www.wellsfargo.com/student/consolidateloans/privatestudentloans

  173. Frank says:

    My mother-in-law cosigned two student loans administered by Sallie Mae (totaling $24K) for one of her sons. She was repaying the loan but recently passed away. The loan is described as “signature student loan – UNSUB.” We don’t have a copy of the original loan agreement and we’re trying to determine if the loan is discharged upon her death. We have contacted Sallie Mae and have received no response. Any advice?

    Thanks for providing such a helpful blog!

    • Barbara Raus Barbara says:

      Hi Frank – if your mother-in-law was a cosigner, the primary borrower would remain liable for the remainder of the loan. However, when a cosigner passes away the lender should be notified. Then they may place a claim on the estate if there is one. Also, you may want to have the primary borrower request a copy of the loan agreement so you have it for reference.

  174. Kevin says:

    Hi, I was just wondering. I am filing our taxes for 2011 and realized that for our tax refund from 2010 we did not deduct my wife’s student loan interest. I’ve added it for 2011, is there a way to add 2010 as well?

  175. Angela S. says:

    Hi. Several years ago, I co-signed a Sallie Mae student loan for my nephew. Even though he promised to repay the loan, he defaulted on it within a year. I have been repaying it every month on time. It was a fixed rate of 6.25%. The balance is now approx. 23,500 and I pay $350 per month. I am no longer in communication with my nephew due to this loan and his refusal to assist in payment. I do not want to keep dragging this repayment for 7 or more years. I tried to have a co-signer release form signed through Sallie Mae from my nephew, but he would not respond. I am a Wells Fargo client and am currently using a savings account to make monthly payments to Sallie Mae. But as I get closer to retirement age, I worry about running out of money. Should I pay this loan off with my funds I have with Wells Fargo? Do you have any suggestions about what to do with this loan to relieve my worries? Thank you! Angela S.

    • Barbara Raus Barbara says:

      Hi Angela – Only you can decide what’s best for your situation, but I will give you a couple things to consider. Unless you are able to be released from the loan and your nephew took over payments, you will remain liable for the loan until it is paid in full. It will also be accruing interest until it’s paid in full. Any amount you can pay extra toward the loan would reduce the overall interest on the loan that you’ll pay, so paying it off could save you money in the long run if you feel that you’ll continue to be the one making the payments.

  176. JohnD says:

    I have a consolidated student loan with the Federal Ford Direct Loans program. I am setup on a standard repayment plan and my current interest rate is 5.8% and they are saying it is a fixed rate and i cannot change it. I am paying 175$ a month which is not a problem but just over 100 of it is going towards interest. That really bothers me. I am wanting to move to another lender so I can negotiate a better interest rate. Any suggestions, guidance, or comments would be appreciated.

    • Barbara Raus Barbara says:

      John – If you’re looking to reduce the total interest you pay on the loan, the best way to do that is by paying more than your required amount each month. If you decide to pursue a lower interest rate, you could certainly look into using another type of consumer credit to pay off the loan, however you’d want to weigh the pros and cons of doing so. You’d be leaving behind some of the repayment and deferment options on federal student loans. Also remember that there is a chance that you might not qualify for better terms on a new loan.

  177. Faraz says:

    Barbara- I had about $30,000 in Federal Loans in $25,000 in Sallie Mae Loans. Federal loans are around 6.55% while Private ones are at 3.75%. I’ve been paying more towards the Federal Loans since they’re at a higher interest rate, but I still have a while to go. Been paying about $1000+ a month towards these loans and it still might take another 5 years. Anyway I can reduce my Federal interest rate from 6.55%, I don’t care if i lose benefits of student loans like forbearance/deferment.

    • Barbara Raus Barbara says:

      Faraz – It sounds like you’re aware of the benefits you’d be leaving behind if you used another type of consumer credit to pay off those federal student loans. With that in mind you could consider a private consolidation loan (Wells Fargo’s option can be found here: https://www.wellsfargo.com/student/consolidateloans/privatestudentloans). Depending on your credit situation you may be able to qualify for a lower interest rate. No matter what, though, if you are able, keep chipping away at your loans. Any extra you can pay each month will help you in the long run.

  178. Kings says:

    Hi, I borrowed $25000 for my graduate program and now am done with school. I got a call from the lender and they explained to me that the amount is now doubled. Reason being the interest has been going up and down without my concent for the past 3 years. Do private lenders have the right to change interest rate on loans without the concent on the borrower?
    How can i reduce the monthly payment of $360 which they are demanding now.
    I enjoy your feedback.
    Thanks

    • Barbara Raus Barbara says:

      Kings – Did you review the promissory note you signed when you took out your loan? That should have the terms which would include your interest rate and any details on changes. Many private student loans are variable interest rates that change based on an index rate (like Prime Rate or LIBOR). You could consider consolidating your loans. There are different options for consolidating federal student loans and private student loans. You didn’t mention which type of loan you had. For federal student loans the Direct Loan program has a federal consolidation loan. That would give you a fixed interest rate (the weighted rate of the loans you include rounded up to the nearest 1/8 of a percent). If you have private loans you may want to consider a private consolidation loan. That interest rate would be based on your credit among other things. Depending on your credit situation you may qualify for better terms than when you initially borrowed which may reduce your monthly payment. Both options would likely extend your repayment term, which would mean a lower payment. Keep in mind though that extending the term and taking longer to pay off the loan would also increase the total interest you pay over time.

  179. Big D says:

    We have 20 year old son in third year med. studies. Co-sign loans for him , 17 year old starts college sept. Wells Fargo will keep loaning money i am sure maybe because can”t bankrupt. But that worries me alot of credit under my name is there any way to get loans in there name only besides fed.loans

    • Barbara Raus Barbara says:

      Big D – Because of the requirements for private student loans (credit history, income, etc.) most student borrowers require a cosigner in order to qualify. Your children could try to apply on their own, but they have a better chance of being approved and potentially getting better terms if they apply with a cosigner. One thing to consider is that once they have an established credit history and could qualify on their own, they could apply for a private consolidation loan without you as the cosigner.

  180. Joe says:

    I recently consolidated my Wells Fargo loans for a total loan amount of $29,651.16 and a 25 year long term. I chose a variable interest rate of 8.750%. I am aware that per the most recent meeting of the FOMC, the Fed intends on keeping the prime rate low at 3.25% for the next two years. If after these two years interest rates increase, can I re-consolidate my loans and chose a fixed rate option? Is there a maximum number of times a person can reconsolidate with a private lender? Does reconsolidating add more to the total amount due?

  181. Joe says:

    I recently consolidated my private student loans with Wells Fargo. The total amount consolidated was $29,651.16 witha 25 year long term. I am aware that per the most recent meeting of the FOMC, the Fed intends on keeping the primate rate low at 3.25% for the next two years. If after these two years interest rates increase, can I re-consolidate my private loans again to achieve a fixed interest rate? Is there a maximum number of times a person can re-consolidate their private loans? Is re-consolidating private student loans disadvantageous (adding more to the total amount due)?

    • Barbara Raus Barbara says:

      Joe – You could likely reconsolidate and choose a fixed interest rate – it’s not guaranteed as it’d still be based on credit and you’d need to meet the qualifications – but it could be an option. How many times you could do that and if you were able to do that would be at the discretion of the lender. One thing to consider is if you did take out a new loan, it’d likely have a new repayment term. So your payments would be calculated on that new term. So to avoid paying additional interest you’d want to pay more than the required amount each month. There also might be fees associated with the loan that you’d want to consider if you decided to reconsolidate to get a fixed interest rate.

  182. Liz H. says:

    I have consolidated my student loans just before starting residency 11 years ago at 5.50 interest rate with the Dept. of Education. Can I refinance again? I had both private and federal loans. Do not have any other loans to add to the refi nor i work for a public institution. Please advise. thanks.

  183. SS says:

    Say someone (naively) co-signed a student loan for a friend while they were in college, not fully understanding the ramifications.

    Then, say that friend is now beginning to have difficulty meeting the loan payments, thus endangering the co-signer’s immaculate credit, just as the co-signer is beginning to shop for a first mortgage.

    Are there any methods of re-course, loan re-structuring, exit strategies, or other options that the co-signer (who is now more savvy and severely regrets co-signing said loan in a prior state of naivete) can consider?

  184. sharon says:

    My student loan is very low about 8k but most is interest. I sent the leander 1k and the lender cite says I have a credit and cannot pay more until a balance is due. It appears even if I pay the loan back early I stil have to pay the entire interest. Is that correct? I really want to pay this off now and can do so, but if I cannot lower the final interest then why both? Please help.

    • Katie Soo Katie says:

      Hi-I’d recommend you talk with your student loan servicer. They will be able to give you the most accurate details concerning your account and payoff information.

  185. ROBMAC says:

    I have a fixed student loan, which I took out in 2007, with a 7.125%, totally about $30,000.00. Is there anyway to refinance to get a lower rate? I’m paying over $180.00 a month in just interest. I know there are ways of getting a lower interest rate such as taking out a home equity loan, personal, etc….but is there anyway to keep my student loan a student loan but with a lower interest? Any advice would be helpful, Thanks!

    • Katie Soo Katie says:

      Hi there, Only you can decide what’s best for your situation. Why don’t you shoot us an email through Ask the Expert (the links on the right hand side of the page) and someone can get back in touch with you about this situation?

  186. Alexander Volek says:

    When I started school I received loans from both Sallie Mae and Direct Loans. I started paying them off right when my 6 month grace period ended. The loans currently total $91,500 between 14 loans with interest rates any where from 13.5 to 6.something. My total monthly payment is $1150 and is set to be paid off in about 8 years. Supposedly I can’t consolidate but then again trying to get someone on the phone from either company that has any clue about what is going on is impossible ( Iv been hung up on multiple times). So long story short I was wondering if it is possible to maybe go through Wells Fargo and have them basically take over the loans as one loan with one interest rate and pay them off that way and so I can be done with those companies. Im just curious if this is something Wells Fargo would do before I call and try to explain to someone over the phone because that’s always a challenge. Any advice would be much appreciated

    • Katie Soo Katie says:

      Hey Alexander Only you can decide what’s best for your situation. Can you shoot us an email through Ask the Expert (the links on the right hand side of the page) and someone can get back in touch regarding this matter?

  187. Liz H. says:

    Hello Barbara- I consolidated all my student loans just before starting residency 11 years ago at 5.50 interest rate with the Dept. of Education. Can I refinance again? I have about 10 years more left. I had both private and federal loans. Do not have any other loans to add to the refi and I do not work for a public institution. Can you give me some options to decide what is best for my situation? Please advise. thanks.

  188. Todd says:

    Hey Barbara..Your Blog is great I have found so much information on here, but still a little confused. My wife is about to grad with her Masters in Education and we are trying to consolidate all her Loans together b/c I am scared of Rates going up in the next couple of years on her Private Loans.

    I am not even sure if we can do this but we just applied at http://loanconsolidation.ed.gov.

    and are trying to consolidate her 3k of stafford loans and her 95K Loans at AES that are mostly held by Bank of America..and I am just confused if we can consolidate Federal with Private..when i have spoke with customer service they say as long as we have 1 federal they will let us..but after reading Blogs it sounds like we Can not..

    We were just hoping we could b/c since she teaches in a low income area some of the loan may be forgiven if they are federal..

    I am sure I will find out from the Loan consolidation dept in a couple of days but any more info would be Great..

    Thanks again for your Blog..

    • Nancy says:

      Todd-You can consolidate your private and federal loans together, but you’d want to carefully consider the terms of a new loan and any benefits of a federal loan – like repayment and deferment options – that you might be leaving on the table if you went that route.

  189. Liz H. says:

    Hello Barbara- I consolidated all my student loans just before starting residency 11 years ago at 5.50 interest rate with the Dept. of Education. Can I refinance again? I have about 10 years more left. I had both private and federal loans. Do not have any other loans to add to the refi and I do not work for a public institution. Can you give me some options to decide what is best for my situation? Please advise. thanks.
    P>S> FOR SOME REASON MY QUESION IS NEVER ANSWERED. THIS IS MY 3rd ATTEMPT, I HOPE I AM LUCKY THIS TIME.

    • Nancy says:

      Hi Liz! sorry we took so long to respond. Once you’ve done a federal consolidation loan you’re locked into the interest rate you have unless you’d want to use another form of consumer credit to pay off the loan. You could consider a private consolidation loan, but you’d want to carefully consider the terms of a new loan and any benefits of a federal loan – like repayment and deferment options – that you might be leaving on the table if you went that route. Hope this helps!

  190. Jon says:

    Just a quick question. I have a private student loan through Nelnet. they told me if i repaid the loan early or refinanced the loan to pay off the total balance early, that i would not be entitled to a refund of interest already paid in. I know with mortgages etc., that if you pay every 2 weeks it uses less interest and brings your principal down faster. car payments are going that route too. When i tried to do it wiht my private loan they flat out said nope we are just holding the payment until the other part arrives before applying it to your payment. Can they get away with this?

    • Nancy says:

      Hi-I’d recommend you talk with your student loan servicer. They will be able to give you the most accurate details concerning the application of payments.

  191. Erin G. says:

    Hi all. I’m just wondering how to either/both: 1. lower my interest rate on student loans and/or 2. lower my monthly payments. I have consolidated federal sub and unsub loans from my undergrad studies serviced by Sallie Mae at a variable 4.75%. I also have private loans with AES (3 disbursements) varying from about 3.7 to 4.25%, variable. Most were in forbearance while I completed my graduate studies, but I just graduated. I DO work for a public educational institution currently–I don’t know if this helps–part of the City University of New York. Any guidance you could provide is much appreciated.

    • Nancy says:

      Thanks for your question Erin! Once you’ve done a federal consolidation loan you’re locked into the interest rate you have unless you’d want to use another form of consumer credit to pay off the loan, but you’d want to carefully consider the terms of a new loan and any benefits of a federal loan (i.e. repayment and deferment options) that you might be leaving on the table if you went that route.
      You could consider a private consolidation loan, for your private loans but you would be unable to include your federal loans.

  192. Charles says:

    I have a loan for about 25K. I already consolidated when receiving a call about it right after school. Wish I hadn’t. The fixed interest rate is 6.5% or something and has been for 6 years. I want a lower rate because I am finally able to start paying this loan off. Could I still look for another Bank to take over this loan? I got a letter in the mail from Wells Fargo about student loans because I’m going back to school this Fall. I want to pay those straight out or get grants if possible. But for this existing loan could I get Wells Fargo or another bank to take over with a lower rate like 3%? My credit is really good.

    • Nancy says:

      Thanks for you question Charles! There probably aren’t many refinancing options that would take it lower. One thing you might want to consider if you’re looking to lower the amount of interest you pay over the life of the loan is to pay more than is required each month. That way you’ll be reducing your principal balance faster, which will mean less of a balance being charged interest.

  193. Summer says:

    I graduated in Dec. of 2010 with a degree in Advertising from The University of Alabama. My parents couldnt afford to help me at all through college so I ended up taking out 7 different loans through Sallie Mae with a principal balance of 64k and have accrued 12k in total interest. I could not seem to find a decent paying job in my field and am currently making just 10.25/hr with bonuses for an average of $1600 per month after taxes. My loan payments to Sallie Mae are an INSANE $800 per month. Thats half of my total monthly income! I try to pay a little more than the monthly amount, but I still have not seen a dent in the $73k that I currently owe. I am 24 and still live with my parents because I cannot afford to live on my own. I have been looking into the Wells Fargo consolidation plan for Private Loans and my parents would be more than willing to cosign. They have good credit but I am concerned about what they would have to put up (i.e their house) in order to help me consolidate to lower the monthly payments in order for me to be able to start a more independent life. If I could lower my monthly payments to even $600 per month I would be able to move out. Do you think this would be a smart move for me to consolidate through Wells Fargo for a chance at lowering my monthly payments?

    • Nancy says:

      Hey Summer this is a great question and my guess is you are not the only person who is struggling. Only you can decide what’s best for your situation. This is a good one for our experts to help out with so shoot us an email (Ask the Expert,the links on the right hand side of the page) and someone can get back in touch regarding this matter, hope this helps.

  194. Lyndsey says:

    I am in desperate need of student loan help! I graduated in 2005. 1- subsidized stafford student loan 1-unsubsidized, 2 others that are Mohela CASH loans that can not be combined bc of the ‘type’ of loan they are. I am paying 153.00 a month on the stafford subsidized/unsubsidized to Mohela and the Mohela cash loans they r suing me over bc I did not have the money to pay them 215.00 a month on top of the 153.00. Our mortgage is through wells Fargo & refi is not going to help bc we already how the lowest intrest rates etc. So, is there a consolidation through u guys I could look into???? That would be ALL these loans combined if not all then maybe the 2 CASH loans??? Just for the 2 CASH loans they r now willing to settle at 275.00 a month but that’s on top of the 153.00..I have 2 small babies in daycare & that alone is a mortgage payment…. Any help or resources of where I could look would be greatly appreciated!

    • Nancy says:

      Hey Lyndsey and thanks for your interest in loan consolidation! Only you can decide what’s best for your situation. We do offer a private consolidation loan program for private loans only. It’s not guaranteed as it’d still be based on credit and you’d need to meet the qualifications. To learn more about our private consolidation loan program, please visit our website at wellsfargo.com and enter “private consolidation” in the Search box. On the Results page, select “Student Loan Consolidation – Consolidate Private Student Loans – Wells Fargo”.

  195. Lily Grace says:

    Hi, I am headed back to school after a long time away. I don’t qualify for Federal loan since I have a degree already from the same institution. I am exploring the private loans and notice they are variable rates. How risky are these loans? Will I find myself 2 years from not paying a significantly higher interest rate than what I borrow at? Any other tips for a returning student would also be helpful!

    • Nancy says:

      Great to hear from you Lily Grace. I would recommend contacting your school’s Financial Aid Office first for scholarships, Pell Grants or work study programs that may be available. Private student loans are another option to cover tuition or college-related expenses. We offer competitive fixed or variable interest rate options. To learn more about this option please visit our website at http://www.wellsfargo.com/student.

  196. sagajagads says:

    If what you’re looking to do is accrue less interest, then the best solution is to pay more money each month toward your principal balance.

  197. Anny says:

    Hi, I’m entering into a college as a freshman. I have been offered a parent loan, federal subsidized loan and a federal unsubsidized loan. I don’t want to take out a parent loan because I don’t want my parents to be in burden. I don’t want to apply for a subsidized loan because I want to pay the interest while I’m in school. Is there a loan that I can take out with the terms of paying the interest while I’m at school and then when I complete college, I’d only have to pay the principle amount .

    • Nancy says:

      Hey Anny! A Federal Subsidized Loan is the best option for you. With a Federal Subsidized Loan the interest is paid by the government while you are in school; therefore, any payments you make while you are in school are applied directly to your principal balance. Most student loans accrue interest until the loans are paid in full. I’d recommend you talk though your situation with your federal student loan servicer. They’ll be able to give you the most accurate details for you to make your decisions concerning Federal Stafford Loans. Good luck!

  198. Anne says:

    Hi, I have a Wells Fargo private loan. When I originally applied for it, I had 2 cosigners. Later during repayment, they both filed for bankruptcy. What are all of my options in terms of possibly discharging, forgiving, or cancelling my loan? If both of my cosigners are bankrupt, do I still have to make payments?

    • Nancy says:

      Thanks for the question Anne! When you get a chance please contact us at 1-800-658-3567 or shoot us an email at http://www.wellfargo.com/student and click “Contact Us” so we can pull your account details to better understand your situation. From there we will be able to see if there are any other options for you. Thanks again!

    • Nancy says:

      Hello Anne! We are going to need more information to answer your question. Could you please drop us a line at 1-800-658-3567or shoot us an email at http://www.wellfargo.com/student and click “Contact Us” so we can pull your account details to better understand your situation? From there we will be able to see if there are any other options for you. Talk to you soon!

  199. Katrina says:

    Hi all, I have 1 private loan for $46K at 10.25% and 2 small FFELP loans ($1840 @ 2.14% and $2040 @6.55%). I’m wondering if getting the interest rate lower on the private loan is possible? I can afford the payment and have been paying more than the min but seeing most of my payment go to interest is discouraging. Any suggestions would be greatly appreciated! Thank you! :)

    • Nancy says:

      Howdy Katrina, our private consolidation loan may be of help to you. Only you can decide what’s best for your situation but to learn more please visit our website at wellsfargo.com and enter “private consolidation” in the Search box. On the Results page, select “Student Loan Consolidation – Consolidate Private Student Loans – Wells Fargo”. Hope this helps!

    • Nancy says:

      Great question Katrina! Private Consolidation could be a way to lower your rate, however in order to apply, Wells Fargo requires more than one loan to be included in the consolidation. The solution you have is a good one. By paying extra with each payment you are chipping away at the principal balance and in turn are charged less interest over the life of your loan. Great job!

  200. Jessica says:

    I am searching around for a private student loan for about $3,xxx. On each interest rate I come across it is an approximation because it is based on credit,etc. which I realize. Does this mean I need to apply at multiple lenders to see which interest rate is actually the lowest for me?

    • Nancy says:

      Hey there Jessica! Before taking out a private loan, be sure to exhaust your other options like scholarships, Pell Grants or work study programs. Contacting your school’s Financial Aid Office is a great place to see what is available. Private student loans are another option to cover tuition or college-related expenses. Only you can decide what is best for your situation. Organizations use different criteria to determine rate. We offer competitive fixed or variable interest rate options. To learn more about this option please visit our website at http://www.wellsfargo.com/student.

  201. Gina A says:

    From everything I’m reading, I’m not sure there’s any help for me. I graduated college in 2008. I’m employed and have $23,500 in one private student loan (I recently paid off my Sallie Mae loan) with a variable interest rate, presently at 5%. I originally borrowed from my local bank but they sold the loan to an agency that is unresponsive and disinterested in my predicament. I have been paying off a bit more than required each month, but the principal never seems to budge (original loan amount was $21,500). If I can’t refinance, I’d like to at least get a lock on a better interest rate. All my other banking is with Wells Fargo (credit card, debit card, savings and checking accounts). Can you help someone like me?

    • Dana says:

      Hello Gina- in order to apply for another private consolidation loan, Wells Fargo requires more than one loan to be included in the consolidation. The solution you have is a good one. By paying extra with each payment you are chipping away at the principal balance and in turn are charged less interest over the life of your loan.

  202. John in Denver says:

    I have a 40k federal consolidation loan at a fairly high interest rate, paying $350 a month, of which $120 goes to interest.

    Is it possible to “re-open” this loan somehow to obtain a better interest rate? I could return to school, getting a new Federal loan, and then “re-consolidate” at a more favorable rate.

    Is this scenario possible?

  203. craig perrelli says:

    my sons wells fargo college loan is approx 65,000 @ 4.75% can you explain why my monthly payment is $455? should it not be in the vicinity of $300.00 per month?

  204. Rox says:

    I have a question.
    I have a Private loan and a Fed Loan the Private loan i owe about 10k and my rate is 6.8% i have 4 diff loans with them that they combined with one payment my monthly is 300$ a month some of those loans are only 24 months and the other 2 are 72 months I am trying to lower my payment and extend my months to 10 years If i can and maybe lower my interest rate. My Private loans I am currently doing a forbearance on them for 6 months to lower my payment as i cant make that large payment and my fed payment right now, My intrest rate is no longer showing i dont know what that means if my rate will change bc i did a forbearance or they arent charging my intrest while i am on the forbearance? My Fed Loans I owe 34,500 after my interest. Those are my Sub and Un sub loans and i have about 10 diff loans and my rate is anywhere from 3.8 to 6.8 each one is a diff rate and its all a fixed rate I was told my monthly on that would be around 400 but it is still in a grace period until Oct. that is a total of about 700 a month and i just cant afford that. How can i lower this monthly payment to under 500 that is where I am most comfortable.

    • rox says:

      Oh my Fed Loans rate is i believe a 3.4%

      • Dana says:

        Hey Rox – thanks for your interest in consolidating your loans. Only you can decide what’s best for your situation.

        Wells Fargo does offer a consolidation loan product for consolidating private education loans. Applicants are required to meet eligibility and credit requirements to qualify. To learn more about our private consolidation loan product, please visit our website at wellsfargo.com and enter “private consolidation” in the Search box. On the Results page, select “Student Loan Consolidation – Consolidate Private Student Loans – Wells Fargo”.

        As of July 1, 2010, Wells Fargo and other private lenders no longer offer federal student loans. For information on federal loan consolidation, you would need to contact the Department of Education at http://www.loanconsolidation.ed.gov.

  205. Barbara says:

    My husband took out a student loan in 1989. The total of the loans were about $9,000. He now owes over $27,000. There were physcial and mental problems that prevented him from making payments. The interest made it almost impossible for him to repay the loan and it snowballed over the years. Is there anyone we can contact to reduce the amount of interest before signing a rehab note to pay back the loan? Over the years his wages have been garnished, our income and our tax refunds withheld and over $12,000 has been paid back. The Dept of Ed reassigned his loan to a collection agency and he is required to make a monthly payment of $200 a month for 10 months then he will be qualified for a rehab program that will now freeze his interest and it will be added to his principal. Is there any way he can have the interest reduced before signing up for the rehab program? Thanks

    • Dana says:

      Hi Barbara – since the Department of Education has reassigned his loan, you might want to contact the Student Loan Ombudsman at the Department of Education at www. Ombudsman.ed.gov and they shold be able to review your loan situation and advise you on your next steps.

  206. Shelly says:

    Hello I have a fixed interest rate of 7% and I have about $80k in federal student loans. Is there any way to get a lower interest rate?

    • Dana says:

      Hey Shelly- I’d recommend you talk with your loan servicer. They will be able to give you the most accurate details concerning federal consolidation. If your loan is with us, please contact us at 1.800.658.3567 or shoot us an email at http://www.wellsfargo.com/student and click “Contact Us” so we can pull up your account and answer your questions directly.

  207. Marisa says:

    Hi my husband went back to school we are in our mid thirties. We own our home and have appox. 150,000 of equity in our home. He is graduating and owes 40,000 at a fixed rate. My question is our credit is good both employed . Should we take out a home equity loan to pay off the college debt because equity loan rates we have looked at are much lower plus the interest can be written off on taxes

    • Dana says:

      Hey Marisa … Only you can decide what makes the most sense for you based on your own personal situation, but please talk with a banker to make sure you understand the terms and conditions of the underlying student loans as well as the benefits and features, including the interest rates and repayment options you would lose if you consolidate them into another type of credit product. You should also consult a tax advisor to discuss any financial moves which you think may be tax-deductible.

  208. Brad says:

    I consoldiated my federal loans (all federal, no private loans) about 10 years ago when rates where higher ($70,000 for 30 years). I can only afford to make minimum payments (~$500) and that will never change. I used to have hope (hence the consoldation for 30 years) but that is all but gone. At this rate (and the interest rate used) I will be paying until I die. Is there anyway to refinance at lower present rates?

    • Dana says:

      Hey Brad, thanks for your questions concerning federal consolidation. I’d recommend that you contact your current federal loan service provider to inquire about what options may be available for you.

  209. Patricia says:

    Hello,

    I would like to refinance my private loan with wells fargo. The website states that you need one or more loans, but when I called, I was told I need two or more. What is the big deal about the total loan count when all I am looking for are competitve rate?

    • Dana says:

      Hello Patricia-in order to apply for a private consolidation loan, Wells Fargo requires more than one loan to be included in the consolidation. To learn more about our private consolidation loan program, please visit our website at wellsfargo.com and enter “private consolidation” in the Search box. On the Results page, select “Student Loan Consolidation – Consolidate Private Student Loans – Wells Fargo”.

  210. nick says:

    Hello. Great blog. It seems there is nothing to do to lower a federal loan aside from automatic payment. However, some of my debt was sold to another lender, Great Lakes. Would that debt still fall under with the promissory note with a promise to pay with the outlined interest, or do I have more flexibility with options for a lower interest rate? What are the typical loan rates running now? Looking forward to your reply!

    • Dana says:

      Hey Nick-I’d recommend you talk with your loan servicer. They will be able to give you the most accurate details concerning interest rates on federal loans.

  211. Beth says:

    I graduated with approximately $150,000 of loans from medical school that I consolidated at 5.125%. I also have $11,000 at 6.55% from grad school that are unsubsidized. Despite paying over $900 every month, the large loan only decreses by less that $100 a month. I see that the loan rate for institutions is in the 3% range. I have very good credit. Would you reccomend seeking out another loan with a lower interest rate at another institution? Also, I am about to enter fellowship, where my budget will shrink considerably. Do you reccomend interest only payments if I can’t make the whole payment.

    • Dana says:

      Hi Beth – Only you can decide what’s best for your situation; however, we recommend that you contact your lender for further direction. We are unable to consolidate Federal loans at this time; if you have any private loans and are interested in consolidating them, we do offer a private consolidation loan. It’s not guaranteed as it’d still be based on credit and you’d need to meet the qualifications. To learn more about our private consolidation loan program, please visit our website at wellsfargo.com and enter “private consolidation” in the Search box. On the Results page, select “Student Loan Consolidation – Consolidate Private Student Loans – Wells Fargo”

  212. shane Young says:

    Hi!
    Thanks for all the info. I’m sure my question is redundant, sorry.
    My student loans are consolidated, but there are two of them? I don’t know why they did it like this?
    Also, I don’t know if they were Federal and where at this point, or if it is a consideration, where the original promisory note is
    About a year ago, the loan was sold to Sallie Mae at 6.8% interest.
    Are you saying that I cannot, at this point, transfer to a lender with a better interest rate?
    Other than automatic payments, is there anything I can do?

    • Dana says:

      Hey, Shane – I’d recommend you talk with your student loan servicer. They will be able to give you the most accurate details concerning federal consolidation.

  213. Mark says:

    Hello – I’m currently paying back two different Federal Stafford loans of $20k each at 6.8%, and another private loan of $13k at 8.25%. At the time I took out these loans I didn’t have much of a credit history, but now I have very good credit. My question is should I try to take out a personal loan with a lower (hopefully) interest rate to pay off these loans. Also, worth mentioning that the expected payoff date for my Stafford loans is in 2033 and 2023 for my private loan. How long can you typically take to pay back a personal loan?

    Any guidance would be greatly appreciated!

    P.S. – I am aware that student loans offer some safeguards (deferrment, forbearance, etc.) that personal loans do not.

    • Dana says:

      Hey Mark – Only you can decide what’s best for your situation. We recommend that you contact your local bank regarding the personal loan options that maybe available to you.

  214. Jon says:

    I took out a student loan from Wells Fargo, which my parents co-signed for. My interest rate is over 9% and I owe approximately $51,000. I am a elementary teacher in Wyoming currently in my third year, I’ve been making my loan payments of over $400 since getting my teaching job in 2010. I am now trying to lower my interest rate and get the loan in my name. In November, I contacted Wells Fargo and was told that in a couple months, I would have made enough consecutive payments that I would be able to refinance my loan for a lower rate and be able to get in my name. When I called today and tried to do this, Wells Fargo said I could not get a the loan in my name and I could not get a lower interest rate, unless I had a co-signer. I don’t understand after two years of making payments, why I cannot refinance the loan. My parents are now retired and are not eligible to co-sign and since I make all the payments I don’t want them to anyway. The only loans I owe are for student loans, I don’t have a mortgage or vehicle payment.

  215. Leslie says:

    Is there a way to “refinance” a student loan to remove a co-signer? Not so much to lower the interest rate, but to remove a co-signer and only have the first borrower be on the loan themselves?

    • Dana says:

      Hey Leslie, Before you consider refinancing, check with your lender or the company servicing your loan. They may offer ways to release the cosigner under certain circumstances – for example, after a certain amount of time or after you have made a certain number of payments on time. If that isn’t an option, you can look into taking out a consolidation loan. Since you said you have a cosigner, I’m guessing this isn’t a federal student loan, so the Federal Consolidation Loan wouldn’t be an option for you (you can include only federal student loans in a Federal Consolidation Loan). Check around for lenders that offer private consolidation loans. Keep in mind, though, that this would be a new loan and it may have a different APR than you have now. Also, because it is a new loan, you start all over again with the repayment period. You’ll want to find out how much you’d pay over the life of the loan and determine if this is a good choice for you.

  216. Aaron says:

    I went through a bankruptcy and had to go through a whole huge process with my student loans. That was back in 2008. I’ve been paying over 8% interest since that time. I currently only have 1 loan and I want to refinance that loan to get a better interest rate on it. I’m having an unbelievably hard time trying to find information on how to refinance my loan.

    It really goes to show how screwed up our world and our priorities are when I can get a mortgage rate under 4% , a car loan for 1% yet the most important thing you can finance, your education, is sticking you hard money like rates. The last thing I will ever let my children do is finance their education. The only thing worse than a college loan is a credit card. That’s screwed up.

    Thanks,

    • Dana says:

      Hey Aaron, it’s unfortunate to hear of this news. In a situation like this, we recommend that you contact your current service provider and inquire on any options that maybe available to you.

  217. Anonymous says:

    Is there a law that states if you having been paying your student loan on time for at least 20 years you can get the balance forgiven/eliminated? I thought saw something on the news to that effect.

    • Dana says:

      Hi-I’d recommend you talk with your loan servicer as they will be able to give you the most accurate details concerning your loan and what options maybe available to you.

  218. Tim says:

    Hi there, this is some great information!

    My question is about extra payments. Right now, my loans have been acquired by ACS. Interest rates are fixed and reasonable, and I’m on a 30yr extended repayment plan. I’ve been pretty under employed for some time, but now I’m making more money.

    I understand that if I make extra payments, that those payments will go to interest first. Says so on the ACS FAQ.

    My question is, what interest are we talking about. The overall interest that “will accrue” over the life of the loan. Or the interest of the month?

    At the moment, my payment terms break down to about 75% interest and 25% principle. I owe about $25K on two different consolidated loans (don’t ask me why it ended up that way, it’s not something I understood at the time), one at about 4.5% the other at about 6.5%. Not terrible.

    I pay $175/mo on the 6.5% loan and about $150/mo on the 4.5% loan. My thought is to pay about $1000/mo total towards the whole thing. So, triple my minimum.

    I’ve looked at some loan calculators, and from what I can tell, this should get me out of debt in the next 6 years should I be able to keep it up.

    However, I’ve also read some horror stories of people trying to pay extra, that their principal doesn’t go down and that ACS is whacky at how they calculate it, and all the extra goes to interest.

    My monthly minimum already covers my monthly interest from what my statements say. So, shouldn’t anything extra that I pay go to the principal?

    Thanks for the input!

  219. Anh says:

    Hello,

    This blog is amazing and I’ve found a lot of information helpful!

    My sister is in her third year of school and is applying for private loans. She has been approved for a loan for $7,500 from Wells Fargo and Citizens. The WF loan has a 6.7% variable interest rate while Citizens is 7% fixed. In the long run, would it be better for her to go with the fixed 7%? I figured that would keep her safe rather than having to worry about the WF interest rate fluctuating to 18%.

    Any input is greatly appreciated.

    Thank you!

  220. Paul says:

    Hello,
    I’ve been out of school now for almost ten years. As a result of deferments or forbearance’s i’ve actually made 0 progress on my loans. I’ve paid about 20 grand over the last ten years and I still owe the same amount I borrowed ten years ago. This makes me want to throw up! All of my loans were through citi and now Discover has purchased my private loans and Sallie mae has purchased my federal loans from citi. Discover increased my interest rate. I’ve called and tried to talk to people and mostly all i get is “we don’t write loans like that we just buy them” when I ask about some sort of refinance. Life has been tough and next month when yet another forbearance comes to term I’ll be paying 433 a month total. I just don’t know what to do. I want new loans with new terms with appropriate interest rates and payment sizes. is that really too much to ask? How do I fix my student loan problems?

    • Dana says:

      Hey Paul – Only you can decide what’s best for your situation. We recommend that you contact your current service provider(s) and inquiry if there are any options available to you. If you are interested in consolidating any of your private loans, we do offer a private consolidation loan. It’s not guaranteed as it’d still be based on credit and you’d need to meet the qualifications. To learn more about our private consolidation loan program, please visit our website at wellsfargo.com and enter “private consolidation” in the Search box. On the Results page, select “Student Loan Consolidation – Consolidate Private Student Loans – Wells Fargo.”

  221. Nate says:

    Hello,

    I have about 37,000 in sallie mae loans with rates between 3.25 and 4.25 for 3 seperate loans. I also have about 16,000 in federal loans at about 5.25%. Is there anyway to consolidate all these loans into one?? I am currrently paying about $600 a month on 37,000 a year income. There has to be some relief somewhere??

    • Dana says:

      Hello Nate – you may want to consider a private consolidation loan program. We have an overview of the process in this blog from October 12, 2012 which could help give you an idea about your consolidation options. Most lenders require that the student be a permanent or temporary resident alien with a U.S. cosigner. Please contact us at 1-800-658-3567 or shoot us an email at http://www.wellsfargo.com/student and click “Contact Us”. From there, we can further discuss this loan program and application process with you.

  222. Courtney says:

    Fabulous blog! I have a question about using a personal loan to pay off my federal student loan. Currently I have approximately 58k in federal student loan debt with an interest rate of 6.8%. My husband and I are paying $500/month on the loan, which is slightly higher than the minimum payment. We have thought that we could save some money and cut down on the term by taking out another loan with a smaller interest rate. In your blog you mention a personal loan as an option for paying off federal student loan debt (fyi we would not qualify for a heloc). The tax deductions on federal loans is no help to us as we are making too much (just barely) and we do not anticipate ever needing to use forbearance so really the federal loan is no benefit. Our credit is excellent, would a personal loan be a good option in this situation, and if so how do they generally operate?

  223. Clif says:

    Hi,
    I stumbled across this blog and it’s very informative. This is great.
    I’m currently paying back my student loan and pay about 4x the monthly minimum. It’s a consolidated loan but, to me, the interest rate is too high at 6.125%. Do I have any options to seek a lower interest rate? The lender has provided a .25% reduction if I use their automated repayment system. .25% doesn’t seem like much.

  224. Justin says:

    I just came across this blog, and I have had a few questions about my student loans. I am about 10 months out of college and am paying my student loans. I have really good credit and have a pretty decent job. I have around $12,000 in student loans with Sallie Mae, but the interest rates seem a little high. Some are even around 7% which seems ridiculous to me. I was just wondering if there was a way to combine them all and have a lower interest rate, and I am willing to pay a little more a month also if the interest rate would be lower. I am definitely willing to pay these off as fast as possible.

    • studentloandown says:

      Hey Justin – thanks for your interest in our student loan programs. Can you please contact us at 1-800-658-3567 or shoot us an email at http://www.wellsfargo.com/student and click “Contact Us”. From there, we can further discuss our loan programs and application process with you.

The Student LoanDown

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