CK Blog

To help out my monthly cash flow for the moment, I changed my payment plans to Sallie Mae. I had went with the default standard payment plan originally, but have switched to a graduated plan. Under this plan, my payment is lower for the first couple of years compared to what I had been paying and will be a bit higher later on. I hope one of these days I will be able to get more aggressive on repaying them even though it does have a really nice interest rate.

Awhile back, I wrote about my lack of ability to conslidate my student loans with a company besides Sallie Mae due to the single lender rule. Congress finally repealed the single lender rule as of June 2006, which should make for a more competative loan market for students. At the time I conslidated my loans, there were some nice offers that I had considered before discovering I couldn’t easily take advantage of any of them. I can only imagine how the market might change and the deals that could be down the pike if people are freely able to change their lenders.

     My conslidation did go through without a hitch and my bill gets paid to Sallie Mae every month without any problems so far. I’m locked in at 2.875%, which isn’t much to complain about espically compared to the 7% and 8% that I’ve seen other people have. Of course I have many many years of repayment to look forward to, but I got two degrees at least right?

     But seriously for anyone in college or about to go into college, take a moment to consider some random free off the top of my head advice.

• First, find and apply for lots of scholarships even if you think you may not qualify for anything, it doesn’t cost you anything but some time and the worst they can say is no. But you may get lucky and get a decent amount of college covered through this manner.
• Second, don’t just take out student loans for whatever maximum you can. Take a moment to consider what you really need and what you can cover through other sources like a job.
• Third, once you have that job, live within what you make. You’ll tell yourself its okay to spend money now because after you graduate you’ll make lots to make up for it. But make things easy on your future self, work a few extra hours and save a few bucks up.

The grace period on my student loans is ending, so Sallie Mae has processed my consolidation loan and sent me the terms of my repayment. I know there were potentially better deals for consolidating the loans that I have read about on Fatwallet’s Finance forums, but I was out of luck due to the single lender rule. The gist of that rule apparently is that if you only have one lender (ie: your school uses Sallie Mae to process your loans), you have to consolidate with them. Although you can also run into problems due to the selling of loans, even though you may have probably from Bank A, when it comes time to consolidate, there is no guarantee that they have not sold your loan along the way. It is common for banks to take the loans they have made, bundle them up together and sell them to others as an investment so the bank has more money available to make loans.

FinAid has some advice for getting around this rule. Of course, when I was in school getting loans, I had no idea about this rule or the potential benefits to me when it came to consolidating time, otherwise I might have tried to do something about it. That is not to say I would not have consolidated with Sallie Mae, who knows…but I would have had more options without as much hassle and work if I wanted to try to bypass the rule.

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