Loan Consolidation?

[moonchigger]

I'm trying to decide which GradPlus loan to get and have a question.  My school says you should probably go with the loan that will give you the 3% rebate for the origination fee and not worry about all the interest rate reductions they offer once you enter repayment because most students consolidate their loans upon graduation. 

While this sounds like a good idea, we have no clue what the consolidation interest rates will be at in three years.  So is it smarter to get the 3% origination rebate now and in my case save $500 or to just pay a little more right now and make sure I get a 6.5% interest rate in repayment?

[chonralda]

A friend and I were also debating this - I think the 3 percent consolidation rates now wont be in existance in 3 yrs. it would be more the 6 percent we see now for the gradplus with that auto debit thing (student loan xpress anyone?). STILL, i dont know if rates would be higher than 6.5 percent or what kind of programs might be offered. for 500 bucks i might take lower interest rate...

[stephanie says...]

from what i understand, the rate you get at consolidation is connected to the rates you have with your lender. so in turn, it should affect your consolidated rate.


and sometimes consolidation isnt the most beneficial, so it is possible that you wont be doing it.

[bass]

Interest rates are only going up.  They weren't as low as 4 percent since like the 50s.  I'm probably going to consolidate early and often. 

And to clarify a correct point above, consolidation of multiple loans gives you the weighted average of the current rates on each loan, rounded up to the nearest (I think) eighth of a percent.

So if you have 10 K at 5 percent and 5 K at 10 percent, you'll consolidate 15 K at 6.75 percent. The advantage is that, if the original loans are variable rates, you've locked in current low rates.