Student loan myths
The deadline to consolidate is fast approaching. Here's what you need to know.
NEW YORK (CNNMoney.com) -- The deadline to consolidate your student loans is two days away...Friday, June 30th.
And while consolidation for many folks is the best option, it also can be a little confusing. Today, we're going to dispel some commonly held myths about student loan consolidation.
Myth 1: It's too late
You still have time. But it's your last chance if you want to lock in the fourth lowest rate in the program's history. There are no second chances.
Your best bet is to go online and choose a lender. You can either consolidate with a lender you already have (if you've forgotten, go to the National Student Loan Data System at www.nslds.ed.gov) or you can find a different one.
Make sure you know what loans you have, what the balance is and your current interest rate. Once you're online, it should only take you 15 to 20 minutes to complete the application.
You don't want to wait until 11:30 pm on Friday to do this since Internet connectivity may be slow. Look for a confirmation e-mail once you apply.
If you need help or have questions regarding your loans, you can all Sallie Mae's hotline (even if you don't have loans with Sallie Mae). That number is 800-448-3533. You can also call 1-800-4-fedaid. That's the number to the Federal Student Aid Information Center sponsored by the U-S Dept. of Education.
Myth 2: You can't consolidate if you only have one loan
You can consolidate your federal loans even if you only have one loan. You need to have a loan balance of at least $5,000 in order to consolidate.
Thanks to a new law that was passed this month, you can consolidate with ANY lender..not just the one that holds your loan. But it will save you a lot of time and effort if you consolidate with your original lender since they have your paperwork already.
Myth 3: Consolidation is good for everyone
Think twice before consolidating your Perkins Loan. Not only does this loan have a 5% fixed interest rate, but Perkins loans often have loan-forgiveness benefits that you may be in danger of forfeiting if you consolidate.
You don't want to consolidate if you're a special education teacher or a teacher in a school district that serves low-income families. That's because there are programs that will forgive your student loans. If you consolidate, you won't have this option anymore.
You shouldn't consolidate your loan with your spouse (which you won't be able to do anyway after July 1st). Even if you get divorced, you can't separate the loan.
Myth 4: Consolidation is ending on July 1st
You can still consolidate after July 1st, but you'll end up paying a lot more.
The procedure for consolidation will remain the same, but there will be some tweaks to the rules. For example, after July 1st, students won't be able to consolidate their loans in school.
Myth 5: Your parents can take up the slack
Not in this case. Junior...you're on your own. If your child is studying abroad or just outside of the country, it's still their responsibility to consolidate their loans.
A loan is a legal document, so if parents forge their kids' signatures, they face serious legal consequences, says Mark Kantrowitz of finaid.org.
Since you can do most of your work over the Internet, there's no reason why Junior can't send in an application. And unlike other contracts, even if the child is under 18, they're still subject to terms of the loan.
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