Brenda from Indiana asks: How many times can I possibly consolidate private student loans? Currently I have somewhere around $40,000 in student loans consolidated with Sallie Mae at about 10% interest rate. I would like to get a better interest rate and save some money on my monthly payment. Is this possible?
Student Loan Guru Answers: Well Brenda, as usual there is no black and white answer to this questions. There are many variables that will go into the answer. But first, let me start by saying a person should NEVER mix private student loan consolidation with federally backed student loans. They’re two different animals!
As you probably already know, consolidating loans is just replacing the loan or loans you already have and bringing them all under one loan. What you’re talking about is consolidating a consolidated loan. And the answer would be that as long as you qualify for a private loan, you can continue to consolidate private student loans, even though I do not consider this a good idea. Get one low interest rate and stick with it.
If you’re trying to consolidate a federal student loan, you still have options although you may not continue to consolidate them over and over in some circumstances.
Some companies DO lower the interest rate based on payment history. Mine were federal loans that were sold to Sallie Mae when i graduated. Sallie Mae has many programs that will help you lower your interest rates, as does many other lenders. Some will lower your rates if you sign up for their auto pay, others may lower your rates if you go a certain period of time making your payments on schedule. Still, others, including private lenders, may even lower your rates just for asking!
Many people go the entire length of their repayment period without consolidating, usually because the interest rates are usually higher than the federal rates. But I suppose if you have private loans this might be in the best interest for your wallet. Just remember, consolidated loans don’t qualify for any loan forgiveness programs that federal loans qualify for.
But then again, a lot of your private student loans may be eligible for bankruptcy if you ever find yourself in such a pickle. Although, if you’ve read this website for any length of time you know I seriously against that. It should only be your last ditch effort and I truly mean, last ditch! Sell the cat, dog, kids, etc before you go belly up because you’re going to regret it down the road. Then you won’t have to worry about how many times you can consolidate student loans!
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