Generation Debt

I just checked into this and called the Right Rate people. I asked the customer service "loan counselor" If I decided to take advantage of this program and the new HR 2711 goes into effect, will it hinder any future of taking advantage of the new programs. She had not a clue as to what I was talking about. Does anyone have any info about this? I guess I have become very skeptical of student loan programs and the "too good to be true" scenerio.

how do we know these places, like "RIght Rate Consolidation" are credible? Since i am consolidated with the Dept. of Ed. now, is their any disadvantage to going with some private company? it sucks these answers are so hard to find.

Angie - I'm not sure how this Right Rate thing would work if H.R. 2711 ever passed. Since H.R. 2711 doesn't seem to restrict how many times you can reconsolidate, the law itself probably wouldn't limit whether you could refinance again. However, the Right Rate loan documents might. Maybe calling the Department of Education for more information would be an idea?

Shawn - I think you can maybe call up the lenders and the Department of Education to try to determine if they are credible. Ask them to mail you concrete information.

I posted about the Right Rate thing because I've been getting a lot of email on it, and wanted to let you all check it out for yourselves. I'm not really endorsing anything, just putting another idea out there.

Our plight is given a page in the latest Newsweek.

http://www.msnbc.msn.com/id/6884900/site/newsweek/

I did the right rate program thru financialaid.com. Basically your interest rate changes every quarter, but can never be higher than the fixed rate you have on the existing loan. The current rate is 5.5%. I'm not sure if it is restricted to Dept. of Ed loans or not. The person I spoke to said the program was developed specifically for people who had fixed rate consolidation loans at high rates.

I was able to drop my payment to $700 from $840, but I was also able to change the terms to equal payment instead of the interest only step plan I was on with the Dept. of Ed., so in the long run, it can't be any worse than where I was with the Dept. of Ed.

I called FinancialAid.com. If your consolidated loan is set-up with this plan, you would receive a new interest rate on a quarterly basis. The rate would never go over 8.25%. Right now, it is at 5.5%. In the past 6 months, the interest rate averaged 4.875%. In the past 3 years, it has never gone over 6%. Keep in mind, interest rates were at a historic all time low the past several years. For those of us who have 8% or 9% interest rates, this would be a good deal. There is one catch. Your loan has to be with the Department of Education in order for FinancialAid.com or another private lender to be able to buy your loan and offer this plan. The main problem is....if you have your loan with a company like Sallie Mae.....they will not release your loan to the Dept of Ed. So, this program is actually not available to most people unless your loan is with the Dept of Ed. According to Sallie Mae, there are federal guidlines they have to go by and one includes the issue of releasing loans. If all loans are consolidated with one company, they cannot release them. However, if your loan is with Dept of Ed already, it would take 30-40 days for the "switch" to be processed. Apparently, according to the rep at FinancialAid.com, you would have all the same federal benefits (i.e. deferrments, special programs, etc.), but would just have the flexibility of having a lower rate (that changes ever quarter).

Gotta tell you, I just went to the VolunteerDebt Away Program site and was very discouraged. It sounds kinda like a well-intentioned pyramid scheme. I love the idea of 2 hours service/week for student loan repayment assistance. But if you read their process or look at the application ... they even liken their application process to "applying to an Ivy League School." Been there, done that.

I'd like to know how much funding is initially available, if I'm applying to "an Ivy League School." The FAQ is clear that they look to the $10 application fee to help as well. Just wonder how much of the group's ability to deliver depends on those $10 application fees ... If it's a lot, this unfortunately can't go far or can't benefit many.

I like the idea of finding creative solutions to our student loan problems. I am really skeptical that this is the right solution.

In addition to this variable rate idea you guys are talking about, I found a better one for existing William D. Ford loan holders that is FIXED and that follows the same logic.

If you have already consolidated into a Direct Loan with DOE (William D. Ford, who never gave me any interest rate reductions other than auto-debit!), Academic Loan Group in San Diego, CA seems to have a good deal. They keep your current rate, but ìre-consolidateî you over to a FFEL loan, and then you can take advantage of their incentives.

I currently have 6.2% with DOE, down to 5.95% with auto-debit. This company takes the 6.2%, rounds to the nearest eighth (6.25%), and then puts me into a new consolidated FFEL at 6.25%, then down to 6% with auto-debit, and then in 36 months, it drops down to 5%! They also cut me a check for 1% of the balance that I ìre-consolidate,î not chump change!! Invest that check and knock off several thousand of principal in 10 years . . . after months of E-mails with these knuckleheads, it turns out it is a legit no-brainer. :)

If you are already with a FFEL lender (i.e., private lender), you are SOL. The scam you need to pull is to switch over to DOE somehow so that you can re-consolidate back to this FFEL. To be able to do that, you need another loan, so go take a 6 hour course and borrow $4K! [You can reconsolidate a Direct into a FFEL, but not vice versa unless you have another loan.]