Please help - question on reconsolidation

[Lauraaa]

Hello everyone -
I am starting a new thread on this question because it is a very,very specific one on re-consolidation.

Here's the scoop:

I currently have a Consolidated loan of 42700 at 2.875% and a Perkins loan of 5600 at 5%. I just recently graduated. My current lender does not have any borrower benefits. I know of another lender that give a 1% reduction in the principle as well as .25% reduction in the interest rate with automatic payments. I would like to switch to this lender to take advantage of these benefits, but in order to do so I must reconsolidate meaning add my Perkins to the current consolidated loan. Now, becasue my Perkins loans is at 5% my plan right now is to pay 5,590 of the loan and leaving the remaining balance at $10. Then, apply for a re-consolidation. This way the weighted average of the Perkins loans ($10 at 5%) will not make a difference when weighted with my first consolidated loan ($42700 at 2.875%). I feel that this would be a great way to change lenders, take advantage of borrower benefits and re-consolidate without having the interest loan change, but I am worried that there is something else that I am not taking into consideration - in other words it sounds too good to be true. Why on earth would any bank want this loan? Is there a catch? Is there any way at all that I might ruin my already very good interest rate on the loan that I have? In other words - any way the interest on the loan could actually increase?

I've read the fine print on the promissory note, called my services, called my lender, emailed my med school's financial counselor, talked to financial counselors at my bank, emailed a couple other servicers to try to see if they had any info on it, and nobody says that it won't work... but I'm still worried. I'm going to call some more people tomorrow but does anyone have any other experience with this that they could share?

Thanks so much....

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[Finding Chi]

I am doing something similar with my loans. I had already consolidated mst of my loans with one institution. I have several perkins loans that were not included in the original consolidation. I am now doing a re-consolidation of all the loans with a weighted average of the interest rates. I am actually doing this through the Dept of Ed. Direct Loans Program (I'd love any input anyone else has on this program).

As for the program you are talking about, Lauraaa, a lot of times the incentives are dependant on making timely payments. My original consolidation offered similar benefits, however during my second year, my deferment paperwork was late (between me procrastinating, and them processing it slowly), the loan went into repayment and became past due before I resolved the issue, so I lost my interest rate incentive (it's now up to 3.125% from 2.85% previously).

So is may be a great deal, but the lender is banking on us busy residents dropping the ball and making a late payment/late deferment at some point. Just stay super on top of the paperwork/payments.

 

[Blade28]

Moving to Financial Aid forum.

 

[mshheaddoc]

closing this thread as there is already a thread by this poster in this forum on this topic.