What Does The Obama Student Loan Relief Program Offer?

It is no secret that many Americans graduate from college mired in debt.  Nearly 66% of college students graduate with student loan debt averaging $25,250 per student according to the Project on Student Loan Debt.  However, student loan debt is only one of the many economic problems confronting young college graduates.  The Project on Student Loan Debt further states:

“In the current economic climate, recent college graduates who borrowed for their education face particular challenges in paying back their student loans. The unemployment rate for young college graduates rose from 8.7 percent in 2009 to 9.1 percent in 2010, the highest annual rate on record.”

At $25,250 average debt, the recent graduate is looking at a $290 payment monthly, which seems manageable, but unfortunately, $25,250 is just an average.  Many students owe much more than that.  My cousin attended law school for 1.5 years before deciding a law degree was not for him; he walked away with $65,000 in student loan debt and a monthly payment of $780.  He is currently living at home and has a serious girlfriend, but any plans for an engagement are on hold while he chips away at his debt.  He is one of many student loan holders who have put off marriage and home ownership because of the amount of their debt.

The student loan problem has permeated the news, and Obama recently announced a student loan relief plan.  What does this plan mean for college students?  There are two main features to his plan:

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How can one refinance a student loan if it is already consolidated?

Jul 28, 2006 by jengyk | Posted in Higher Education (University +)

How come one can refinance cars, houses, loans, etc, except student loans. You get a consolidated rate versus refinancing a student loan

You can, I get offers from banks all the time, just be aware that you'll lose some of the priviledges such as a forbearance, etc.

If I have already consolidated my student loans, is there still a way to "refinance" for a lower rate?

Apr 23, 2006 by conrack | Posted in Financial Aid

I currently have a 7.625 rate on my consolidated student loans. Is there a refinancing process for student loans the same way there is for, say, a mortgage?

The regulations for the refinancing of Federal student loans are very different from mortgage refinancing. Whereas you could refinance a mortgage as often as you want (well, sort of), reconsolidation isn't technically supposed to be possible for student loans. There a a few loopholes, though. The only way you might be able to "re-consolidate" would be:

(1) if you borrow a *new* Federal student loan. If you have another loan that is unconsolidated, you can apply for a new consolidation loan that would combine this new loan with your old consolidation loan. However, this would only lower your rate a little bit since your new interest rate would be based on the weighted average of the rate for your new loan and the rate of your old loan. So, if you currently have a Federal Consolidation Loan of, say, $20,000 at 7.25% and you borrow a new $5,000 Stafford Loan at 4.7%, you'd have four times as much at 7.25% than you do at 4.7%, so your consolidated rate would become 6.75% -- not much lower, huh?

That said, you won't be able to obtain a new Federal student loan unless you are a student, so this may not even be a viable option for you.

(2) if you "have been unable to obtain a Federal Consolidation Loan with income-sensitive repayment terms acceptable to [you]," you can obtain a Direct Consolidation Loan, which is the other type of student loan consolidation that the federal government offers.

This might be your best option. Just make sure that your current loan is a Federal Consolidation Loan (if it's already a Direct Consolidation Loan, you're out of luck). If it is, check the Dept. of Ed's website to see if you are eligible: http://loanconsolidation.ed.gov/borrower/beligible.shtml. There's no credit check on these loans, so it can't hurt to try!

There are private companies out there that claim to be able to "reconsolidate" any federal consolidation loan. These companies are SO disreputable that I hesitate to even mention them. DON'T DO IT. They're in business only to make money off of you. Many of them don't even deal in Federal Consolidation Loans, so you could end up with a "reconsolidated" private loan with horrible terms and none of the benefits and security of the Federal student loan that you started with.

Good luck!

Can you refinance student loans after you have consolidated them?

Nov 07, 2008 by jno | Posted in Financial Aid

I consolidated my student loans a couple years ago and got them to a fixed interest rate. I didn't know what I was doing--I was young and no one explained to me what was going on. Now that I'm a little older, I know that my interest rate is not the best that it could be. I'd like to refinance, but I don't know if it's possible since I have already consolidated. Please help! Thank you!

There's not much you can do. Student loans are not something that another lender will willingly take on. Your best bet at this point is to call the lender who holds your loans and ask if the rate can be adjusted a couple of points. Very often, after 12 consecutive, on-time payments, you can get a break on the interest.

Failing that, the best thing to do is to voluntarily increase your payment amount. You will be amazed at the impact this will have on your balance and repayment term.

I had about $5000 in student loans set up to pay $50 a month for ten years. I paid $100 a month and paid them off in three years. You don't have to double your payment to get results. Any extra you pay goes a long way to reducing the debt, the accumulated interest and the repayment period.

Can you refinance student loans after consolidation?

Jan 15, 2007 by Minion26 | Posted in Financial Aid

I consolidated my student loans years ago (when interest rates were high). Last year I called my lender to see if I could refinance and take advantage of the lower interests rates. I was told that I could not do this because I had already consolidated my student loans and you would not refinance without consolidation. Is there any way around this?

I am back in school and currently paying cash for tuition. If I instead took out a small student loan this term, could I then consolidate that loan with my other student loan and take advange of the lower interest rates that way?

Your lender is correct. I would think the only way you could refinance and get a lower rate would be if you borrowed a new loan from a bank or an equity loan on your house and used those funds to pay off the consolidated loan.

Now if you borrow now you can reconsolidate all your new loans with your old loans but the interest rate will be a combination of the rate on the old loans and the rate on the new loan not what the old loans would be if they were not consolidated currently so unless you borrow a lot more it won't drop your interest that much.

I have a federal student loan currently at 6%, should I refinance?

Apr 03, 2008 by snitzelgrooven | Posted in Financial Aid

I have already consolidated? Should I switch the loan to another institution at a lower %?
I know I am not able to consolidate again but would it be wise to take my loan somehwer else to get a better %?

Hi,
I used "Credit Solution" to settle my loans and improve my credit score.They managed to reduce my loans up to 58%.It's legitimate.I came across this company on NBC News Special Edition.Check it out here:
http://urlhawk.com/549

Student Loan Interest?

Mar 27, 2008 by Gidgit | Posted in Personal Finance

I graduated med school in 2000 with a ton of subsidized & unsubsidized student loans. I consolildated in 2001 and got a 7.75% fixed rate interest rate. I currently owe $109,000. 2 years ago, a private company "bought" my loan giving me a 1% rebate and an interest reduction from 7.75% to 7.25% after 36 on-time payments. I will qualify for the rate reduction next year. I am wishing or hoping there is some way I can refinance this loan to get a better interest rate. I do have a very small loan I never consolidated still outstanding (the principal is about $500). The smaller loan is a HPSL (health professions student loan). Does anyone know if I can reconsolidate my huge already consolidated loan and combining it with my tiny HPSL loan? If not, anyone have ANY suggestions on how I can get a lower interest rate? I do NOT own a home or have any collateral except my car. My income is $115,000/year. I pay $2,000/mo on the stud loan. The interest I'm paying gnaws at me constantly.
I'm in a 25% tax bracket so am not taking home $115,000 by a long shot!! I'm taking home about $86,000. And no matter how fast I pay it off, 7.75% interest is just so high. Really, I just want to know if there's any way to get a lower interest rate without having a home as collateral. I don't see how I can pay more than $2,000/month and even at that rate, it's still gonna take me five more years even with the reduction to 7.25 percent. I'm in agony over how much i'm paying in interest! Thanks in advance for any ideas.

You can live on about $40,000 per year and use the rest to pay your loans off. This interest is compounding and with your balances, you are going to eat up a lot of interest every year.