Question:
Saw an ad. Can I really lower student loan debt by refinancing, consolidating and lower the rates to 2.5% Is there some catch? I have private and federal student loans Ad says: "Loosen The Grip Of Student Loan Debt at www.StudentCollegeLoan.com lower your monthly payments by up to 60% and lock in interest rates as low as 2.5%. Lower your monthly payment Lock-in a lower interest rate, fixed for the life of the loan ·

It's free to consolidate ·

No credit check required ·

Maintain all the current benefits of your federal loans ·

Pay just one bill each month The StudentCollegeLoan Company http://www.StudentCollegeLoan.com " Is there a catch here or what?

Answer:
There are several companies that consolidate student loans. The advantage is a fixed interest rate at the current low rates, and lower monthly payments if you need that -- though be aware that you will pay more interest over the life of the loan to do that. The rates are figured thusly: "The interest rate for a Direct Consolidation Loan is the weighted average of the interest rates on the loans being consolidated (as of the date we receive the application), rounded to the nearest higher one-eighth of one percent. This rate is fixed for the life of the loan and cannot exceed 8.25 percent. "

I don't know about all student loans, but the ones we have are variable rate that changes once each year and is figured at the rate of the 91 day T-bill plus 3.1 %. That puts ours at 4.86% this year - other loans are figured slightly differently depending on what kind they are and when you took them out. There should not be a fee or up front costs to consolidate. Make sure you use an approved consolidator. There is lots of info here: http://loanconsolidation.ed.gov/borrower/borrower.shtml