The Consolidation Clock
Posted on July 1, 2005 7 Comments
If you haven’t filed for student loan consolidation by now, you’ve missed your chance to lock in historically low rates.
At midnight, the interest rate jumped from 2.77 percent to 4.7 percent for those in school or on deferment plans, from 3.37 to 5.3 percent for those of us paying off loans and from 4.17 to 6.10 percent for parent PLUS loans.
Ouch. Don’t say I didn’t warn you.
If you did consolidate, check your new billing statement carefully. Depending on how long you’ve been paying, your monthly statement may look a lot lower. That’s because when you consolidate, the loan department reverts your increments back to a 10-year payment plan.
To truely take advantage of low interest rates, continue to pay the same as before you consolidated.
For instance, I always pay $200 per month on my loan. After consolidating, my payment due decreased significantly. But I still continue to pay the $200 per month in hopes of paying off the loan in 2011 (or before then), rather than 2014.
Suze Ormon, on the other hand, recommends only paying the minimum due on student loans. She reasons that you’ll make more in the long-term investing that money rather than spending it to pay off loans now.
Ultimately, the length and manner in which you pay back your loan is up to you. But be knowledgeable about why it takes so long.
Category: Money
Tags: student loans
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7 Responses to “The Consolidation Clock”
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July 2nd, 2005 @ 9:56 pm
I tried to get my brother to do this but he obviously wants to pay more..LOL
Congrats.
July 2nd, 2005 @ 10:21 pm
Why did NitroMed (NTMD) only increase 13% on news that it would begin sales of its drug BilDil by 7 July? Based on the market for Nitric Oxide drugs BilDil should bring sales of $220 million by 4Q 2005 and $550M by 3Q 2006. That would put NTMD’s book value at $42/share. It is currently priced at $22/sh. Why is there such an unvaluation of this stock. Is it still undiscovered?
July 3rd, 2005 @ 4:45 am
Anonymous-
If you’re throwing this question to me for an answer, you should know that I don’t yet invest in the stock market beyond my 401K. I don’t have enough money saved up yet. You might want to ask some of the authors at sites who are more knowlegeable about investing. Try visiting those posted in my links section.
- Nic – The Budgeting Babe
July 3rd, 2005 @ 4:47 am
Bohemianmama-
My brothers didn’t do it either! Crazy, I say. Did you?
Nic
July 5th, 2005 @ 4:56 am
I think the anonymous comment is a spam ad for NTMD. As for the consolidation, I did it a few weeks ago and now have to pay a paltry $185 on a $30,000 loan over 20 years. I agree with Suze. Since the interest is so low, why not use the extra money to invest in a mutual fund? Even if you don’t know a ton about investing, you could buy an index fund, say the S&P 500, which has minimal fees and returns an average of 9% a year (over time). It’s late and the lights are off, so I can’t run the numbers, but I’m sure paying the minimum and investing what you save would be a better move in the long run.
Jeff
http://www.roadtorich.com
July 8th, 2005 @ 1:51 am
Do you think Amerigon (ARGN) is undervalued or undiscovered?
Amerigon (ARGN) markets its Climate Control Seat (CCS) “cool-seat” for sale to automobile and truck manufacturers. Amerigon disclosed contracts for two more vehicles lines that will offer its CCS system when the vehicles premier in Fall of 2006: the 2006 Buick Lucerne and the 2006 Lincoln Zephyr luxury sedans. Also CCS will be available on 17 vehicle lines made by five major automotive manufacturers – Ford, General Motors, Toyota, Nissan and Hyundai by 3Q 2006.
ARGN joined the Russell micro-cap index and has the highest revenue growth of the recent stocks added to that index. ARGN has healthy positive cash flow and revenues exceeding $32M in 4Q04. Given ARGN’s market capitalization of only $35M ARGN is very undervalued based on the fact that gross revenues that will double in 12 months. Why is ARGN’s value undiscovered by the trading public?
October 1st, 2005 @ 7:19 pm
Keep it up. I enjoy commercial re-refinance also.