Question for the Money Doctors
Question submitted on May 31, 2012.
QuestionI have private & federal loans of about $55,000.00 between 2 kids. Some are at low interest rates, but some are at over 8%. We seem to get nowhere paying on these high rate loans.How can we get these loans consolidated to the best interest? We have never consolidated. Thanks
Thank you for asking about student loan consolidation for your two children, which would allow you to consolidate your loans with one lender at the average interest rate of your existing loans. You will be able to find several consolidation options available to you on the Web, including a special program with the U.S. Department of Education. The Department began offering Special Direct Consolidation Loans to eligible borrowers in January 2012. This is a short-term consolidation opportunity, ending June 30, 2012, which you may be eligible for.
If you have equity available in your home, another option may be for you to refinance your mortgage and/or take out a home equity loan in order to use the proceeds to pay off the student loans and achieve a lower interest rate. Mortgage interest rates are at historic lows, and a bargain relative to your 8% student loans. Interest is tax deductible for home equity loan principal up to $100,000.
I hope that this helps. Please don't hesitate to contact a CPA/PFS who will be able to help you further. Please visit www.findacpapfs.org to find a CPA/PFS in your area.
For additional information visit http://www.360financialliteracy.org/