I'm a sucker for breaking the awkward silence. If a professor waited long enough after asking a question in college, I would always pipe up. Well, if I kind of knew the answer.
I asked y'all for questions about student loan consolidation, and so far you haven't asked any! Well, the awkward silence is getting to me—so I'm going to raise my hand and ask (as well as answer) questions that I've been asked in the past.
What exactly is consolidation?
Consolidating means taking out one new student loan that combines your other student loans. Your consolidation loan lender will pay off the loans you are combining, so you'll have one new loan for the total amount. BTW, when people talk about student loan consolidation, they're usually referring to federal loan consolidation. Some lenders also offer options for private loan consolidation.
Am I eligible?
If you have federal student loans—no matter which lender holds them—you can consolidate them with any lender. Here are the federal loans that I'm talking about:
- Federal Family Education Loan Program loans (Stafford, PLUS, SLS, and Consolidation Loans)
- Federal Direct Loan Program loans (Stafford, PLUS, and Consolidation Loans)
- Federal Insured Student Loans (FISL)
- Federal Perkins Loans
- Health Professions Student Loans (HPSL)
- Nursing Student Loans (NSL)
And yes, you read that right. If you already have a federal consolidation loan and take out another federal loan (say you go back to school after a couple years to get a master's degree), you can "reconsolidate" and add more federal loans.
You can also consolidate a single Federal Stafford or Federal PLUS loan if you want to lock in the rate.
Why should I consolidate?
Consolidation offers a couple key benefits:
- You might see a lower payment each month—which can help when you're trying to manage other monthly payments while paying back your loan.
- Instead of making several payments, you'll only have to make one.
- Your loan will have a fixed interest rate—this is a big one, especially if you have variable-rate federal loans. The next questions tell you why.
What kind of rate will I get?
For federal loan consolidation the rate is an average of the rates on all the loans you are consolidating, rounded to the nearest one-eighth of a percent. But it won't get higher than 8.25%. Speaking of rates …
When should I consolidate?
This is an important question right now because students with variable-rate federal loans will see an interest-rate increase on July 1, 2007. If you have a federal loan that was issued before July 1, 2006, you're in this boat. These loans also increase by 0.60% when your grace period ends, so it's better to consolidate while in grace.
Why shouldn't I consolidate?
In some situations, there may be a better option to ease your loan repayment—like different payment options.
Also, you need to be aware of the disadvantages of consolidation. Since you might be extending your repayment term, you could end up paying more interest in the long run. And, it's possible you might lose any borrower benefits you've been reaping on your loans.
Here's a good checklist 
that walks you through your decision.
What else should I know about consolidation?
- You can't "unconsolidate" your loans. Once you consolidate, your old loans don't exist anymore—your consolidation lender paid them off.
- Until your lender tells you your consolidation is complete, you need to continue making payments on all your separate loans.
OK, now that the silence is broken, is there anything else that you're wondering? If so, raise your hand.
if I can't unconsolidate, will another student loan company agree to buy my part of the student loan and seperately buy my ex-husbands part of the loan so we no longer have this joint debt? I'm remarried and this is a nightmare! If we can't unconsolidate, they should at least agree to send two seperate but duplicate bills since we are no longer married, but they will only send them to my ex. Direct Loans has been a thorn in my side for the past three years because of this...HELP!
Hi Jen -- Once you consolidated you and your ex-husband became jointly and severally liable for the total amount of the consolidation loan regardless of future marital status. The loan can't be separated by any lender. One solution that may be an option is for each of you to take out a consumer loan (personal loan, home equity loan, etc. depending on your assets) to pay off your part of the loan. However, this might not make financial sense if you have a better rate on your consolidation loan than you'd get on a consumer loan.
Have you tried talking with Direct Loans or received any feedback from them about your situation?
i'm having the same issue! i really want out of this with him - i have no problem paying my student loans back, but i don't want to pay for HIS education!
I'm in the same situation; only the bill comes to me. He pays me monthly just fine, but it shows up on my credit! His amount is 3x mine so it makes the payoff date 2029!!! Of course, Sallie Mae offers no solution. Surely they are asked about this all the time. It would be great if we could get two separate loans with them again in order to keep our low interest rate!
I didn't mention it before, but I wanted to clarify that spousal consolidations are no longer possible.
So while the advice for those of you in this situation right now isn't ideal, it's good to know that people won’t find themselves in that predicament in the future.
Is there a way to renegotiate
for a lower interest rate on your private consolidated loans? I find it appalling for a lender to charge 16% on a private loan when the govenment only charges 8%
I'm in the same situation. My ex and I have been divorced for over 10 years and we consolidated with Direct Loans. Same thing, I signed on the 1st line and thus all this debt (including his law school loan debt) shows up on my credit rating. We have only agreed to pay the minimum and thus have not even hit the principal - it just plain ol' sucks.. . I've written my congressmen in both New York and Florida to no avail. I am happy for those that will not enter into this situation in the future but what is Congress doing for those of us living the nightmare from signing a loan agreement in the past. I would like for all of those in the same situation to post so we can at least unite and get our legislature to address the issue. . . they do work for us you know! I will try to get another e-mail address so that we can work together to right this wrong!! Who's with me?
I am in the same situation with a joint spousal consolidation loan with Sallie Mae. My ex and I have been divorced for six years and has been very irresponsible about making the payment every month. In our divorce decree we had it stated that we are each responsible for a portion of the debt, therefore if one of us does not abide by the decree the other could file contempt of the court order. I am in the process of going through the motions with my attorney now because I have had enough.
It's really a shame that something cannot be done by the government or that Sallie Mae will not agree to renegotiate our debt into two separate loans.
James in NH
I am in the same situation. I am paying back my loans under the income contingent method and my income has gone up quite a bit but the loans go up at a exponential rate. They are getting almost too much to handle but the ex, that was ordered to pay half pays nothing. Here is my view. My income is significant and so is my new wife. Together our income will make the student loan payment unmanagable, probably $2,500 per mo. My ex makes very little money and was ordered to pay half. It is not fair for me to shoulder all the burdon and pay her loans nor is it fair for her to pay half with payments based on my income...why don't the courts do something????
I am hunting down answers to my problems as well and found my way to this post. Although my husband and I are still married I am hopeful that there is a way to help our situation as well. Years ago we consolidated with a spousal consolidation loan, after which time my husband returned to school. We now have three payments out each month: one to our consolidated, and two others for his new loans. We can't afford all of these payments and want to consolidate into one easier combined monthly payment. I was sad to find today that spousal consolidations no longer exist, although I understand why. For my situation, we are stuck! We cannot consolidate the three together, at least I haven't found anyone that will allow it yet. Our current company no longer consolidates at all. Any advice? P.S. I'm going back to school in a few months but should not have any additional loans added in. However, we just purchased a house and I found out that the consolidated loans are in MY name. Hello? Just because my name was in the first signature box!
I find myself in this situation with a twist... my spousal consolidation is an absolute mess.... first of all my estranged ex husbandis five states away, we have five children together that he is supposed to pay child support for... never does it. every once in awhile he will get a meager little job, but will never be responsible enough to pay it all ... not to mention the 38,000.00 in student loans. so i am left to pay it all myself while trying to support myself and my kids. if i apply for a deferment then he also has to qualify for the same deferment. so frustrating considering he will not talk to me on the telephone, and basically doesn't care either way about any money matters. since the state takes 1/2 of his wages for the child support debt, it makes no difference to him if this loan goes into default because they won't get any money from him at all. they will take my wages, and my tax refund for the next ten years to pay it back. I would qualify for an income sensitive repayment which would be manageable for me,but HE also has to qualify....*sigh* most of the debt was from loans in my name, but these loans supported our family while i was in school. help i don't know what to do.
I am in the exact situation here...Remarried with a joint consolidated loan with my ex-spouse. This has been a nightmare for years...to makes things worse I am not eligible for Public Loan Forgiveness under the CCRAA because of this joint loan, even though I work in government service. Are there any forums, websites, etc where I can join other with this issue to work towards a solution?
I'm in the same situation. Thought consolidation was a good idea, got a divorce (in 1997!!), ex was supposed to pay per our divorce decree, he didn't, we went into default, etc. We did work together to get out of default but I had to babysit him every step of the way to get there. We're now in forbearance because he isn't working. Our loan is DOUBLE the original size because of all of this. I really just want to find a way to be responsible for half and him be responsible for half and go on my merry way!
It is UNBELIEVABLE how many people across the country have the same issue! This is disgusting that Sallie Mae or the government won't do something about ex-spouses being able to unconsolidate their debt. What's amazing is that they would probably get more money being paid back because the responsible people trying desperately to find an answer want to move on with their lives and get this debt paid. I too had the the courts separate our student loan debt, sent it to Sallie Mae with the judge's blessing only to be told that it can't be done. I'm so glad that this can't happen any more to unsuspecting couples, however, SOMETHING MUST BE DONE to those of us who are stuck in this hell!!!!!!
"...the nightmare from signing a loan agreement in the past."
Key words: You signed the loan agreement.