Student Loan Consolidation

Update 01/19/2006.

Definition: Student Loan Consolidation is the process where a financer (lender) pays off your student loans and gives you a new single loan for the amount of the old loans with an overall lower monthly payment than the cumulative payments of your old loans.

Or so it should work. My experiences during the this winter of 2005 in finding the right path to a decent loan consolidation gave me an incentive to write a few words on the subject. I have just started this page, please be patient as it will grow with what I think are some valuable tips. 

A typical example of what not to do

First of all here a small example of stupidity. After an excellent summer this year the man with the financial hammer hit me because:

• I should not have spent over $3,800 on a new (used)  car
• I definitly should not have taken out an extra 2K loan to finance it

This ofcourse on top of my already existing three (!) loans. After waking up to the new term I started doing the maths and found that if I did not take action the bank that financed the 2K would probably repo the car by Christmas. On top of that I would have to live on $50.00 for food and drink (after deduction of my rent and other fixed costs) for the next three years. Any one else recognise this pattern?

How could I have been so blind? Well, an easy fix would be  just selling the car right? Well suppose you´re right, believe me I have tried. The best offer I could get for my Mustang was $2,600, it seems I seriously overpaid. So sell the car, lose $1,200 on the purchase price just to pay off the 2K (excluding penalties). I don´t think so. More later on this subject.

Let´s start at the beginning. First of all, did you know you are entitled to know what your credit report contains, and who modifies it?

It is your legal right to know what your credit report says. I would encourage anyone who has loans to request a free copy of his or her credit report. The cheapest way for students to do this is by contacting TRW, the nations largest Dallas based credit agency. TRW will give you one free report per year if you ask for it in writing. 

Here is their contact address:

TRW Consumer Assistance Center
PO Box 749029
Dallas, TX 75374
Phone: 1-800-392-1122 



Otherwise, if you have been denied credit within the last 30 days, you can obtain a free report from a credit reporting agency, or CRA. Look in the Yellow Pages under "credit" or "credit rating and reporting."

Please check back frequently for more tips.