How to take care of multiple student loans (consolidation, payment strategies)

Question

I've freshly graduated college. Here's my current standing:

I estimate ~ $1200/month in free cash after bills/entertainment/etc. My loans are as follows (all US based):

1: Perkins
     Amount: 3,240
     First payment due March 1, 2015
2: Stafford unsub
     Amount: 8,000
     Current interest: 1,150
3: Direct stafford subbed
     Principal: 19,000
     Current interest: 71
4: Parent PLUS loans (In my parent's name, but I'll be repaying) payments start 11/10/2014 on all of these. All through Nelnet, Inc.
     5 separate loans
     1.
        a. Principal  25,045
        b. Interest   1,142.78
        c. rate       6.41%
     2.
        a. Principal  3,068
        b. Interest   370.93
        c. rate       7.9%
     3.
        a. Principal  1,500
        b. Interest   206.33
        c. rate       7.9%
     4.
        a. Principal  5,000
        b. Interest   1,072.25
        c. rate       7.9%
     5.
        a. Principal  10,095.16
        b. Interest   2,818.88
        c. rate       7.9%

5. Wells Fargo Loans
    Still getting information regarding these. Probably around $18,000 (in 2 separate loans)

I saw this post. I'm wondering if it's still applicable? IF not, what should I do?

Questions:

1. Which of these loans can be consolidated into one loan? Is it better to turn it into a few large loans, or would it be best to keep them small (in terms of how it looks on credit)?

2. If I start paying on the loans that aren't due for some time now, will I be expected to start paying for them RIGHT AWAY? For example, if I put 200 down on loan #1, will my first payment still be due to them on 3/1/15?

3. Is there any way to get the parent PLUS loans in my name? Right now it's hurting my mom's debt/income ratio. I on the other hand have a car, no credit card debt, and an apartment (where I plan to stay for at least 2 more years) so I don't see me needing a credit check any time soon.

4. Could it be worth taking out a private loan to pay all of these off and just pay on that loan? My credit score is ~ 720 but I don't have any collateral (car is leased), so I'm not sure about my odds of getting that loan

I'm not a huge fan of the snowball method - I don't need the 'pushes' to keep going. I'd rather save as much money as I can when paying these off, so I'm thinking the best one to go after first would be Loan 4 part 1, but I'm not positive.

EDIT: I'm definitely not eligible for the loan forgiveness for working in the public sector. I also have 3 months of safety net already.

Answer 1

This page at the Department of Education's Student Aid site summarizes the payment plans available. In particular, you should note that parental PLUS loans are not eligible for income-based repayment.

If we were back in the Stone Age, when I had to write actual checks to pay off loans, I'd advocate for maximum consolidation, just to reduce the paperwork. With modern electronic payment methods, that seems much less necessary--just set up automatic payments for each loan and let them go. Make additional payments to principal on the highest interest loans as the funds are available.

I would not try to get rid of the Federal direct loans with a personal loan. Though they are not dischargeable in bankruptcy, they are subject to forgiveness after a certain period of time, and they have income-based repayment plans available. They are also relatively low interest.

To transfer the PLUS loans to your name, you probably will have to take out a personal loan. If you qualify for that much debt, it will likely be at a higher interest rate than the current loans. My credit union is currently offering unsecured loans at rates from 10-18%.

With respect to question 2, I don't know if making any payment starts the payment clock, but I doubt it. On the other hand, unless they are accumulating interest on top of the principal during the grace period, there's no point in prepaying. Just save up that money and make an extra big first payment (designating that the extra is to be applied to principal, rather than prepayment of future installments).

Answer 2

If, as you mentioned, you don't get a psychological advantage from having fewer loans, the best method for saving money is to paydown (or refinance) the loans with the highest interest rate first.

To consolidate loans, you are unlikely to receive a lower rate unless you have an asset to back the new consolidated loan. When interest rates are offered, lenders calculate the risks of default. With student loans there are protections for lenders that prevent you from writing them off in bankruptcy, so they already have a lower rate than typical credit card or signature loans.

Consolidating Federal loans directly with the government will give you a larger loan with the average interest rate of the other loans, so you lose the advantage of targeting extra payments to the loans with the highest rate.