Student Loan Consolidation

[Anonymous]

can I consolidate my student loans before my discharge? They are currently in bankruptcy deferment and once my discharge goes through, I would much rather them open 1 loan than 5 on my account, but I don't want to jeopardize the discharge.

[Taoron]

The loans will be placed on deferment from the time you file bankruptcy with the court and the loan processor gets notified and the time of your discharge.  I thought it would be a good option to consolidate as well.  My scrore actually dropped after doing it, so you might want to watch out with that.  It's basically closing old lines and creating a brand new one.  The AAoA will become affected.  

Just something to consider.

[Anonymous]

My loans are actually all reporting as closed and IIB. According to other advice on the forum form miscellaneous threads, they will be opened as new loans with new account numbers post-bankruptcy, so AAoA will be affected no matter what. I want to consolidate BEFORE the discharge so when the lender reopens my account, it opens as one loan instead of five.

[TRC_WA]

They will open new accounts once you are discharged... but mine opened with the same origin date (2001) as my original loans that show IIB...  so AAoA isn't affected at all.

[gdale6]

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@TRC_WA wrote:

They will open new accounts once you are discharged... but mine opened with the same origin date (2001) as my original loans that show IIB...  so AAoA isn't affected at all.

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AAoA is affected with the addition of new TLs backdated to 2001, AAoA is increased. AAoA is always affected with the addition or deletion of OC accounts.

[StartinOver]

I have 10 loans, I think, and have consolidated a few different times. It is misleading to believe you will only have one reporting after consolidation. You will still have all of them reporting separately and have that many chances to goof up. Consolidation only does one thing for you, correct me if I'm wrong, and that is that is assures on interest rate until paid off.

[bstone]

No, if you consolidate you should have no more than two loans, subsidized and unsubsidized.  Unless you also have private loans which can't be included in a federal consolidation.  You can even consolidate federal PLUS loans with your regular student loans, if you have both.

As far as the benefits of consolidation, the biggest one is locking in the interest rate.  On older loans the rate was variable from 2.77% to 8.25%, all new loans are a fixed rate at 6.80% (I believe that's the rate).  PLUS loans are generally at 8.25%.  It also allows for an extended repayment term of up to 30 years depending on your balance, whereas individual loans only allow up to ten years.

Keep in mind though, consolidation uses a weighted average to determine your final fixed rate.  If you have a high dollar amount of loans at a higher rate, your overall rate will be higher.  Likewise, if you have a large amount already consolidated at a lower rate and you add in some at a higher rate, it should still be a good overall rate.  My loans are locked in at 3.25%, I have more since but I don't want to consolidate and increase the rate.  So I just deal with multiple loans.

There are some smaller benefits, but those are the two biggies.

[StartinOver]

I have had school loans for maybe 15 years or more. I have always had them as separately reporting after consolidation. No exceptions. which means that I can have about 30 TLs for my school loans.

[TRC_WA]

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@gdale6 wrote:

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@TRC_WA wrote:

They will open new accounts once you are discharged... but mine opened with the same origin date (2001) as my original loans that show IIB...  so AAoA isn't affected at all.

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AAoA is affected with the addition of new TLs backdated to 2001, AAoA is increased. AAoA is always affected with the addition or deletion of OC accounts.

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I was mainly referring to the stories I read all the time here "OMG if I close my account I'll lose AAoA."

No you won't, not immediately anyway.

The IIB accounts will fall off along with everything else in a year... I realize my AAoA will be affected somewhat... but it isn't something I stress about being 15% of a FICO score.

[bstone]

That's interesting.  I just pulled all three bureaus, and the only individual loans I have reporting are the ones I did not consolidate.  Anything which was consolidated shows "Paid, transferred" or "Consolidated".