Is this right?!

[Anonymous]

I went to loanconsolidation.ed.gov to see if I consolidated school loans what the payments would be. I used their calculator, I know its just a estimate tho.

Right now there are about 8 loans in deferment until sept. All together totaling $43,000.

The site says (depending on what payment plan I go for) the monthly bill will be about $250 a month. Which is great. But for 25 years, the total I would be paying for a $43000 loan comes out to about $90,000 by the time Im done paying for it!!

Is there any other way? I mean I understand school loans are known to take a lifetime to pay off. But if you look at a car loan, you don't take 25 years to pay that off. Yeah the low monthly payment sounds great, but is that the price you pay - I mean doubling the school loan amount is crazy.

Is it better taking out a personal loan to pay off the school loan instead?

Im just in a state of shock I guess, didn't know it was going to turn out like this.

Any advice would be appreciated!!

[LynnInMN]

You cannot compare a 5 or 6 year car loan to a student loan at 25 years....it is like comparing a car payment to a mortgage. 

For starters you wont get a personal loan with the interest rate unsecured for the interest rate that your student loan is at.  Secondly, the $250 per month is a 25 year repayment number.  Increasing your payment will shorten your term   Increase your payment to $380 and you are done in 15 years for $68K, $495 and you are done in 10.  Play with the calculator at http://www.finaid.org/calculators/scripts/loanpayments.cgi

[Anonymous]

Thank you, that calculator is very helpful. Gives me an idea what I can afford. But do you understand what I mean about a car loan.. a school loan seems like you buy a car and use a 30 year mortgage to pay it off, its just crazy! Yes paying the loan off the sooner the better, but with other expenses I dont know if I can afford paying it off any sooner then 25 years without making money tight. Is it possible to pick a loan for 25 years and having a payment of say $290 a month and when I can afford it pay extra with out penalty?

 Also is the loanconsolidation.ed.gov the best possible place to consolidate loans?

Thank you again LynninMN, I just didnt realize how much this was all going to be, trying not to stress.

[LynnInMN]

In my humble opinion, Direct Loans is the only place I would considering consolidating student loans.

[Anonymous]

When I worked for a for-profit FFEL lender, we referred borrowers we could not help to DIrect Loans. Getting them to consolidate there was far better then having them be included in our default rate.

As a financial aid officer, Direct Lending means less time doing paperwork, and more time to help my students and their families. 

Message Edited by COD on 06-03-2009 11:11 PM

[Anonymous]

You can always pay more than your minimum at any time without a problem, on any loan (unless there are prepayment penalties).

If you want to pay your student loans like a car loan, just amortize them over 4-6 years and pay whatever amount the calculator shows.  You'll pay a much higher payment, but yout total payment will be much lower.

If you could pay a car loan off over 30 years, you'd pay double the purchase price in interest too.  It's just Time Value of Money.

Message Edited by Mike14 on 06-05-2009 06:45 PM