From pmcconahay at ou.edu Thu Jun 6 12:25:01 2002 From: pmcconahay at ou.edu (Mc Conahay, Pamela K) Date: Tue Mar 23 20:17:19 2004 Subject: [Lender] Consolidation Question Message-ID: <55206A473154D011924D0020AFF7ACB50AB21C2B@mail1.oulan.ou.edu> I am the first to admit that I'm not that "up" on terms of consolidation loans, and frankly, I don't want to be.....even though I know questions about consolidation are going to become more prevalent. That's what you're for, right? I've gotten this question from a student and rather than do a lot of research and still get it wrong, I thought I'd go to the horses mouth, so to speak. So, horses, what do you say? I am currently paying back my student loans at a rate of 8%. I would like to take advantage of the rate reduction that will occur in July 2002. I have approximately 4 years to pay back my student loans, and am on target to have them paid off by mid 2006. If I consolidate my loans, will I be forced to pay it back over a longer time period? In other words, if I consolidate my loans, can I still pay them off in the next 4 years? Pam McConahay Asst Dir., Compliance & Support Svcs University of Oklahoma Financial Aid Services 731 Elm, Rm 125, Norman OK 73019-2111 (405) 325-4617, fax (405) 325-7608 pmcconahay@ou.edu From pmcconahay at ou.edu Thu Jun 6 16:24:14 2002 From: pmcconahay at ou.edu (Mc Conahay, Pamela K) Date: Tue Mar 23 20:17:19 2004 Subject: [Lender] Thanks for Help on Consolidation Info Message-ID: <55206A473154D011924D0020AFF7ACB50AB21C89@mail1.oulan.ou.edu> I had several helpers respond with info and I used all of it to formulate this answer to the student: I'm not an expert on loan consolidation so I asked for some help from lender colleagues who know more than I. I've used their information to create this answer: Should You Consolidate? The first thing I want you to consider is whether you will really qualify for this lower interest rate that we're all hearing about in the news. You mentioned that your current rate is 8% which makes me think you have a fixed rate loan taken out some time ago. Be aware that the interest rate on a new consolidation loan will be the WEIGHTED AVERAGE of your CURRENT interest rate ROUNDED UP to the nearest 1/8th percent....so you could actually be increasing your interest rate with a consolidation loan. The borrowers who will really "clean up" on consolidation are students whose loans were made after July 1 1994----their student loans are at a variable interest rate not to exceed 8.25%. The variable interest rates have dropped to an all time low as of July 1, 2002 (4.06% for students in repayment, 3.46% for students who are still in school, in grace period or deferment). If a borrower has all of his loans at the post 7/1/94 variable rate, he'll get a weighted average on his consolidation loan based on that 4.06% or 3.46% rate. That's why these borrowers want to take out a consolidation loan and lock in the cheap rate. But, if you don't have any variable rate loans, you're not going to enjoy any of the benefits of these lower rates if you consolidate. It's critical that you're sure of the current rate of your current loans before you consider consolidation. If you aren't sure, check out your loan record on the National Student Loan Data System (NSLDS) at http://www.nslds.ed.gov/ or check with your lender. If You Decide to Consolidate: There is no prepayment penalty on any federal educational loan, so you can always pay the loan off more quickly than required with no penalty. However, the lender is required to offer you at least a 10 year repayment plan. For example, if the standard payment for your loan on a 10 year repayment plan is $100 per month, the lender can't set your required payment at more than the $100 unless you ask them to. I think you should consider letting your lender set you up on the 10 year plan and just add additional principal to your payment each month. If you ask your lender to set your loan on a 4 year payment schedule, you'll be REQUIRED to make that higher payment----if you have any financial difficulty, you'll be stuck. If you just add on the extra principal VOLUNTARILY, then you have flexibility if there is ever an occasion when you can't afford the higher payment. BE SURE TO NOTIFY THE LENDER THAT THE EXTRA $ YOU ARE SENDING IS TO BE APPLIED TO PRINCIPAL. (I think they are required to do this on federal education loans, but from my experience with commercial lending, it's always a good idea to make sure they know where the extra should go.) Your lender should be able to help you figure out how much you need to pay each month to hit your 4 year repayment target. Or, any of the loan calculator sites (like the one at www.finaid.org) can help you calculate a 4 year payout. Thanks again for all your help! Pam McConahay Asst Dir., Compliance & Support Svcs University of Oklahoma Financial Aid Services 731 Elm, Rm 125, Norman OK 73019-2111 (405) 325-4617, fax (405) 325-7608 pmcconahay@ou.edu From mmowdy at ogslp.org Fri Jun 14 14:02:42 2002 From: mmowdy at ogslp.org (Mowdy, Mary) Date: Tue Mar 23 20:17:19 2004 Subject: [Lender] Special Mortgage Loans for Oklahoma Teachers Message-ID: <67B1776185FFD311926100805FC11F9D01AA3D54@HANDEL> Good afternoon! I'm assisting the OSRHE Communications division in identifying lenders who are currently offering special mortgage loans designed to help keep teachers in Oklahoma. If you represent a lending institution that offers something along these lines, please let me know ASAP! My understanding is that the Daily Oklahoman is doing a story on teacher shortage incentives and would like to talk with a lending institution that offers such a program about the program specifics. Mary Mowdy, Executive Director Oklahoma Guaranteed Student Loan Program P. O. Box 3000, Oklahoma City, OK 73101-3000 405/234-4310 800-247-0420 fax: 405/234-4565