To consolidate private student loans or not to...
That is the question. This question popped up on several mailing lists with no direct answer. Here is what I'm doing:
Amidst special offers to consolidate, I am not going to.
NYU had a deal with Citibank (private student loans) to offer prime minus 1%, without it ever to exceed 8.25% or 8.5%. I believe if you consolidate your loan, you loose that offer. So anyway, I just called Sallie Mae with one of their special offer coupon codes, waited 15 minutes to talk to a rep, who told me that if I consolidated the loans, the interest rate would be between 7.75% to - 14.25% (yikes!), depending on your credit. ARE THEY KIDDING? I thought consolidation was to bump the interest lower, kind of like taking out a second mortgage. 14.25% is like not taking a loan out, and just using your credit card to pay for school, jeez, at least you could get 100,000 frequent flyer miles if you use a rewards credit card. 7.75% is if you have good credit. So I told that rep, look my interest rates are 7.25%, why would I want to use your service? And continued to tell her that Citibank offers a consolidation deal where it's prime minus .5% if you consolidate with them AND register to pay online, and then after 36 months of paying they know off another .5%. And she said that Sallie Mae doesn't do offer incentives like that. Also, don't go through the process of applying to see what rate you get because they do a credit check (similar to applying for a credit card), which adversely affects your credit score. What ever happened to the story that broke out about all these loan officers of various schools getting incentives from Citibank? I thought Citibank Student Loan Corporation was going to pay $33.7 billion to 2 million students. When is that schedule to happen? I called Sallie Mae (who was involved in that scandal), and of course the reps outsourced to India, didn't really know anything about that story. How convenient...
Reading the FINE PRINT:
-If you want to consolidate your loans to have one payment each month.
-It want to reduce your monthly payment amounts (but you'll end up paying your loan longer and more).
-Sacrificing the NYU deal that was made with Citibank (prime minus 1% capped at 8.5%).
-You might have 2 or 3 payments, but if you're organized, this shouldn't bother you. You have to write out a separate check for each loan. Don't assume that you can add your loan amounts with Citibank, your payment will just go to one loan and not the others, then you'll incur late fees. Just kind of view these annoyances as micro payments.
Interesting story about Citigroup, CEO, Charles Prince, resigns after emergency meeting, but don't feel sorry for him because he gets to take part of our loan money home, specifically this amount:
$87 million on top of the roughly $53.1 million in pay he took home in the last four years... plus a pension worth $1.74 million and another one million stock options (estimated at $4 million).
Why this sloth should be skewered? He spins and wins his yacht. Funny that the New York Times link named this file 02jabba. Does that name coincide with Jabba, the Hutt because he kind of looks like Jabba anyway.
Wouldn't it be neat if Michael Moore did a documentary on privatizing student loans?