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Time to Consolidate

This article was written by in Debt Reduction. 5 comments.

I spent the last 45 minutes or so consolidating my student loans. I’m a graduate student, working on my Master of Business Administration degree from the University of Phoenix Online. Even though I have these loans, they get paid off as soon as I receive my reimbursement check from my company. However, when I first started the program, I used some of my reimbursement to pay off my higher-interest undergraduate loan.

In any case, I have under $12,000 in student loan debt, even though I won’t have to pay most of that. The two loans totaling that amount have an interest rate of 2.77%. If I didn’t do anything, the rate would probably jump to above 4.0% on July 1. That is the date that variable-interest student loans make their adjustment every year. It’s almost guaranteed that these rates will go up.

If you consolidate now, you can lock in your lower variable rates. In most cases, the consolidating bank will determine the weighted average of your interest rates and round up to the nearest quarter point in order to determine the interest rate for the new loan.

I will end up with an interest rate of 2.875% if everything goes according to plan; this is still much less than what the rate would most likely be if I do not consolidate.

The process of consolidation was much easier than I expected. First, I took a look at Affiliated Computer Service’s website, the company that services my current loans. They had some forms that required filling out and sending in. I decided I didn’t want to go through that trouble, because I tend to be impatient and want things processed immediately. Printing out and sending in Adobe Acrobat forms downloaded from a website is so 1997.

I called the customer service line. After about ten minutes on hold, I got in touch with someone. They gave me the number I had to call for College Loan Corporation, the group that owns my loan. I called and waited for another five minutes.

When Brad picked up the line, he informed me that the service is completely automated. He took my information and told me I should expect the forms through email within five minutes. They were there within two, and I proceeded to complete the application online.

The process was painless. The new loan will continue to be deferred while I am taking classes, which is an unexpected bonus. If you have student loans, consolidate now. There are only a few days left before the interest rates increase.

Updated February 6, 2012 and originally published June 20, 2005.

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About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

avatar 1 Anonymous

I am beginning graduate school in the fall, so I will be able to defer my loans then. As far as I can tell, if I consolidate now I won’t be able to start a new deferment. I only have about $7k in loans, so the advantage of being able to defer seems to outweigh the higher interest I will pay in two years, especially since I will likely be able to deduct all of the interest I pay on the loan anyway.

Unless of course I am misunderstanding something, which is highly likely.

avatar 2 Luke Landes


I believe the only reason I am able to defer my consolidated loan is because they are all loans for graduate school. If they were undergrad loans I wouldn’t be able to defer them after consolidation.

This is how it was explained to me by Brad from the College Loan Corporation. I would have gone ahead and consolidated either way; I’m working full time and I could payy of the loans pretty easily, since most of it is reimbursed by my employer.

avatar 3 Anonymous
avatar 4 Luke Landes

Awesome, finally my school will gain some credibility! :>

avatar 5 Anonymous

be careful coz they are increasing the interest rates

“From July 2006, interest rates on federal student loans will be fixed in at 6.8% as a result of the legislation that was passed by Congress in February. “