Investing as a new home buyer with the hope of selling it to pay off student loan is another option, though risky in the current mortgage market and job uncertainty. However, if one does not take a risk, one may never get certain dreams come true.

This is not entirely true. Anecdotally, I applied for a mortgage pre-approval at a time when I had submitted my application for consolidation, but the consolidation did not yet go through. I told that to the loan officer I was working with and she ran the numbers both with and without consolidation, and it came back approved in the with consolidation scenario and not approved without consolidation. So there must be something to it. IIRC, she didn’t change the monthly payment amount, just consolidated it into one payment, and that was literally the only change she made. This was Wells Fargo, by the way.

There are some companies that *lock in* the rate reduction after 36 or 48 or however many months. They cannot be rescinded. Those are the companies I’m looking at, now.

I have read lots of comments about student loans being good debt and I agree with that to some extent. If you have an interest rate less than inflation then it can be good. Otherwise its no different than a mortage or a car loan.

We definitely do not intend to pay off the 92K conslidated early. We could pay it off early but that extra money will do much better earning interest in savings, mutual fund, IRA, etc. The loans after July 2006 of course are at the 6% variable rate but congress just passed a bill last month to reduce rate down to 3.5% over the next 5 years. I hope by the time she graduates (no more in school consildation after july 2006), we can consolidate below 6%. We will be paying that part off early if the interest rates aren’t lower than 5%.

One important thing to consider when conslidating is to be VERY, VERY, VERY careful who you consildate with. There is an enormous amount of underhanded practices these consolidations companies will do. Once you conslidate with them, they may sell off your loans to another company and leave you with their terms and customer service which can be horrible compared to the original lender. In addition, they may try to keep you from getting benefits like an interest rate reduction by sending your first bill late which means your first payment is late.

We went through a company called graduate leverage. This is just for graduate students, but basically these guys partner with a reputable lender and prevent them from doing any of the underhanded practices. We can be assured we can get our 1.25% rate reduction as long as we pay on time for 18 months and setup automatic withdrawls.