I was looking into federal student loan consolidation on a $12,828.19 student loan (now at 7.22% – pretty high).
I was offered 7% after consolidation and it goes down to 6% after 36 monthly of timely payments. In 3 years locking in an interest rate of 6% is appealing (as my current rate probably will never get below 7%). Making it tempting to just ride the loan out for the entire term as I can accrue interest in a savings account and get a tax break on the loan interest each year.
After review, I realized I have a benefit on this loan with my current lender for a $480 rebate in 15months if I stick with the loan and don’t consolidate.
You think consolidation is the best route now, ride it out for the length of the current loan, or simply pay it off after my rebate in 15months taking the higher rate now?
Side note: Currently I’m 24 years old, my net worth is -$50K (student loans) and just got a new job grossing $83k. I have $11k in a 5.3% APY savings account.
What would you advise this reader and what other advice would you give about his $50,000 in student loans?