consolidate Undergrad subs. loans?

[usrael]

I'm not sure what to do.
I understand that in-school consolidation is no longer an option with the new fixed rate interest (6.8%). So my medical school loans that I will take out beginning Aug. are not an issue.
However, I currently have Stafford Subs. loans from undergrad, that will climb to 6.8% from 4.7%. The gov. pays the interest all the way through residency so I am not sure I want to consolidate and lose the flexibility of being slightly more in control of these loans.
While its a risk, its not a big one..my loans from undergrad consist of 13,000$ (all subs.). A lot can happen in 7 years...good and bad.

any opinions?

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[OSUdoc08]

I'm not sure what to do.
I understand that in-school consolidation is no longer an option with the new fixed rate interest (6.8%). So my medical school loans that I will take out beginning Aug. are not an issue.
However, I currently have Stafford Subs. loans from undergrad, that will climb to 6.8% from 4.7%. The gov. pays the interest all the way through residency so I am not sure I want to consolidate and lose the flexibility of being slightly more in control of these loans.
While its a risk, its not a big one..my loans from undergrad consist of 13,000$ (all subs.). A lot can happen in 7 years...good and bad.

any opinions?

1. The government does not pay the interest through residency.

2. You will pay the interest after you graduate AND while you are paying them back.

3. You don't lose any flexibility or control.

Consolidate the loans. If not, you're just burning money for no reason.

 

[usrael]

1. The government does not pay the interest through residency.

2. You will pay the interest after you graduate AND while you are paying them back.

3. You don't lose any flexibility or control.

Consolidate the loans. If not, you're just burning money for no reason.

1. yes they do. you can declare up to 3 years of economic hardship (aka residency) and your subs. loans are taken care of by the gov. If someone knows otherwise PLEASE say something.

2. Again..i think you are wrong. I'm talking subs. loans here...

3. You lose benfits such as the 1% annual return which goes down (albeit slightly 0.25%) You lose 6 month grace period.

 

[OSUdoc08]

1. yes they do. you can declare up to 3 years of economic hardship (aka residency) and your subs. loans are taken care of by the gov. If someone knows otherwise PLEASE say something.

2. Again..i think you are wrong. I'm talking subs. loans here...

3. You lose benfits such as the 1% annual return which goes down (albeit slightly 0.25%) You lose 6 month grace period.

I'm not sure where you are getting your information. Whether your loans are subsidized or unsubsidized, you’ll be charged interest during a period of forbearance.

http://www.finaid.org/loans/default.phtml

"Forbearances

During forbearance, the lender allows you to postpone or reduce your payments, but the interest charges continue to accrue. The federal government does not pay the interest charges on the loan during the forbearance period. You must continue paying the interest charges during the forbearance period.

Note also that there are limits on the length of forbearance. Forbearances are typically granted in 12-month intervals for up to three years.

Forbearances are not granted automatically. You must submit an application and provide documentation to support your request for a deferment. Forbearances are granted at the lender's discretion, usually in cases of extreme financial hardship or other unusual circumstances when the borrower does not qualify for a deferment. Do not stop making payments on your student loans until after you are notified that your forbearance has been granted."

 

[It'sElectric]

Consolidate your loans. The loans will be in deferment during med school (so interest won't accrue....i believe this is true even if you consolidate them, but check). Furthermore, even if interest does begin accruing during residency, that's honestly not a huge deal, considering you should be able to at the very least make payments on the interest (if not the actual loan). Payments on a $13,000 loan will be around $90-100 on an extended plan.

Just check to make sure your subsidized loans don't accrue interest after consolidation, and you should be golden.

 

[usrael]

I'm not sure where you are getting your information. Whether your loans are subsidized or unsubsidized, you’ll be charged interest during a period of forbearance.

http://www.finaid.org/loans/default.phtml

"Forbearances

During forbearance, the lender allows you to postpone or reduce your payments, but the interest charges continue to accrue. The federal government does not pay the interest charges on the loan during the forbearance period. You must continue paying the interest charges during the forbearance period.

Note also that there are limits on the length of forbearance. Forbearances are typically granted in 12-month intervals for up to three years.

Forbearances are not granted automatically. You must submit an application and provide documentation to support your request for a deferment. Forbearances are granted at the lender's discretion, usually in cases of extreme financial hardship or other unusual circumstances when the borrower does not qualify for a deferment. Do not stop making payments on your student loans until after you are notified that your forbearance has been granted."

I am not talking about forbearance. The economic hardship option is considered deferment and sub. loans interest is paid by gov.
The following is from a presentation on the Northstar T.H.E. Website:

Economic Hardship Deferment – Most medical students will qualify for this deferment during their early years of residency. An economic hardship deferment is based on a ratio of your income to your monthly student loan
payment obligation. Here are a few tips to consider when applying for this deferment:
– You will need to qualify for this each year; it is available for 12-month intervals for up to 36 months.
– Qualification for an Economic Hardship Deferment considers monthly payments based on a 10-year term.
– It might be better to use your last income tax statement as documentation of your income rather than a
recent pay stub. Even a slight increase in pay can change your ability to qualify for this deferment.
Both of the following conditions must be met for a borrower to qualify for Economic Hardship Deferment:
1. Your total monthly loan payments on federal education loans amortized over 10 years must equal or exceed
20% of monthly gross income.
2. Your monthly gross income minus total monthly loan payments (as described in #1) must be less than
$2,352.17. (This amount is 220% of the greater of the monthly wage or the monthly living standard for a family
of two OR living in poverty; subject to change each year.)

 

[It'sElectric]

I am not talking about forbearance. The economic hardship option is considered deferment and sub. loans interest is paid by gov.
The following is from a presentation on the Northstar T.H.E. Website:

Economic Hardship Deferment – Most medical students will qualify for this deferment during their early years of residency. An economic hardship deferment is based on a ratio of your income to your monthly student loan
payment obligation. Here are a few tips to consider when applying for this deferment:
– You will need to qualify for this each year; it is available for 12-month intervals for up to 36 months.
– Qualification for an Economic Hardship Deferment considers monthly payments based on a 10-year term.
– It might be better to use your last income tax statement as documentation of your income rather than a
recent pay stub. Even a slight increase in pay can change your ability to qualify for this deferment.
Both of the following conditions must be met for a borrower to qualify for Economic Hardship Deferment:
1. Your total monthly loan payments on federal education loans amortized over 10 years must equal or exceed
20% of monthly gross income.
2. Your monthly gross income minus total monthly loan payments (as described in #1) must be less than
$2,352.17. (This amount is 220% of the greater of the monthly wage or the monthly living standard for a family
of two OR living in poverty; subject to change each year.)

So you'd be covered then.

 

[OSUdoc08]

I am not talking about forbearance. The economic hardship option is considered deferment and sub. loans interest is paid by gov.
The following is from a presentation on the Northstar T.H.E. Website:

Economic Hardship Deferment – Most medical students will qualify for this deferment during their early years of residency. An economic hardship deferment is based on a ratio of your income to your monthly student loan
payment obligation. Here are a few tips to consider when applying for this deferment:
– You will need to qualify for this each year; it is available for 12-month intervals for up to 36 months.
– Qualification for an Economic Hardship Deferment considers monthly payments based on a 10-year term.
– It might be better to use your last income tax statement as documentation of your income rather than a
recent pay stub. Even a slight increase in pay can change your ability to qualify for this deferment.
Both of the following conditions must be met for a borrower to qualify for Economic Hardship Deferment:
1. Your total monthly loan payments on federal education loans amortized over 10 years must equal or exceed
20% of monthly gross income.
2. Your monthly gross income minus total monthly loan payments (as described in #1) must be less than
$2,352.17. (This amount is 220% of the greater of the monthly wage or the monthly living standard for a family
of two OR living in poverty; subject to change each year.)

I don't see anywhere on here that the government pays your interest.

 

[usrael]

I don't see anywhere on here that the government pays your interest.

during periods of deferment the gov. pays the interest of subs. federal loans.
economic hardship is considered deferment.


I spoke with another rep.
The 6 month grace period disappears after consolidating your loans. This isn't true with all consolidation programs, but unfortunately this is the case with T.H.E.

have a great weekend.

 

[OSUdoc08]

during periods of deferment the gov. pays the interest of subs. federal loans.
economic hardship is considered deferment.


I spoke with another rep.
The 6 month grace period disappears after consolidating your loans. This isn't true with all consolidation programs, but unfortunately this is the case with T.H.E.

have a great weekend.

Even if this is true, you will be paying the interest of those loans after the deferment is over.

Why pay the extra interest?

 

[UserNameNeeded]

Even if this is true, you will be paying the interest of those loans after the deferment is over.

Why pay the extra interest?

Why do you think a student borrower would "pay the extra interest" in this situation? The government pays the interest that accrues on subsidized Stafford loans in deferment.

So, say, you graduate in June 2010. You wait until the end of your grace period and at the beginning of 2011 you file economic hardship based on your federal tax return for the previous year and you qualify for deferment. You file again for the hardship at the beginning of 2012 and 2013. During that entire time, no interest accrues on the subsidized Stafford loans.

So, basically, you are not responsible for interest on those subsidized loans from the start of medical school in 2006 through 2013. At the end of 2013, you officially enter into repayment. The balance you owe at that point should be no more than the exact amount of loans you took out-- there should not be any interest added into that balance.

Interest will then begin to accrue on that balance in 2014 and the borrower is responsible for it all through repayment, even if they qualify for forebearance and don't have to actually make payments.

 

[OSUdoc08]

Why do you think a student borrower would "pay the extra interest" in this situation? The government pays the interest that accrues on subsidized Stafford loans in deferment.

So, say, you graduate in June 2010. You wait until the end of your grace period and at the beginning of 2011 you file economic hardship based on your federal tax return for the previous year and you qualify for deferment. You file again for the hardship at the beginning of 2012 and 2013. During that entire time, no interest accrues on the subsidized Stafford loans.

So, basically, you are not responsible for interest on those subsidized loans from the start of medical school in 2006 through 2013. At the end of 2013, you officially enter into repayment. The balance you owe at that point should be no more than the exact amount of loans you took out-- there should not be any interest added into that balance.

Interest will then begin to accrue on that balance in 2014 and the borrower is responsible for it all through repayment, even if they qualify for forebearance and don't have to actually make payments.

It looks like you just answered your own question.

 

[UserNameNeeded]

What are you talking about? There's no "extra interest" in that scenario. How does consolidation save you on interest?

 

[mshheaddoc]

What are you talking about? There's no "extra interest" in that scenario. How does consolidation save you on interest?

Yes I'm lost with OSUdoc's logic as well.

 

[OSUdoc08]

What are you talking about? There's no "extra interest" in that scenario. How does consolidation save you on interest?

It locks in the current interest rate. It is jumping up several percentage points next month.

 

[OSUdoc08]

Yes I'm lost with OSUdoc's logic as well.

I'm not sure why you would want your interest rate to jump up when you can lock it in now.

 

[UserNameNeeded]

Losing half of a year of interest-free grace for the possibility of locking in 5% fixed interest on loans that may not accrue interest and enter into repayment for over 8 years seems a bit much. A lot can change in legislation and economics where the interest rate on the subsidized Stafford loans could be lower, could be same and will *never* exceed 8.5%.

 

[OSUdoc08]

Losing half of a year of interest-free grace for the possibility of locking in 5% fixed interest on loans that may not accrue interest and enter into repayment for over 8 years seems a bit much. A lot can change in legislation and economics where the interest rate on the subsidized Stafford loans could be lower, could be same and will *never* exceed 8.5%.

It's nowhere near 8.5% currently, but it will sure end up there if you don't consolidate.

Are you really going to be concered about your grace period when you are making $200,000 a year?

I'd want to start paying it off immediately. You can use your residency years to start saving up money to begin payments. Waiting another 6 months is useless.

 

[UserNameNeeded]

How are you so sure of what a medical student borrower is going to be making when repayment begins? Unless the specialty requires only 3 years of residency immediately after graduating, the borrower won't be even making a quarter of that figure.

Waiting 6 months while the government pays the interest on over $50,000 in subsidized loans is a useful deal in any scenario.

And if I was making $200,000 a year, I wouldn't be so quick to pay off relatively low interest debt like student loans and mortgages, either. Having those in hand may have serious tax benefits for someone with a six figure salary and expecting to fork over at least 35% of it to the government.

Another benefit of the grace and deferment for the subsidized loans is that it allows you to pay off the higher interest unsubsidized portion of your loan balance while not worrying about the subsidized portion.

 

[OSUdoc08]

How are you so sure of what a medical student borrower is going to be making when repayment begins? Unless the specialty requires only 3 years of residency immediately after graduating, the borrower won't be even making a quarter of that figure.

Waiting 6 months while the government pays the interest on over $50,000 in subsidized loans is a useful deal in any scenario.

And if I was making $200,000 a year, I wouldn't be so quick to pay off relatively low interest debt like student loans and mortgages, either. Having those in hand may have serious tax benefits for someone with a six figure salary and expecting to fork over at least 35% of it to the government.

Another benefit of the grace and deferment for the subsidized loans is that it allows you to pay off the higher interest unsubsidized portion of your loan balance while not worrying about the subsidized portion.

Since the majority of physicians enter family practice, internal medicine, pediatrics, and emergency medicine, it WOULD be 3 years.

Also, if you plan on waiting a long time to repay, then consolidating now makes EVEN MORE SENSE, since you will have a much lower interest rate.

 

[sna]

I just consolidated my undergrad loans, but I haven't obtained my loans for grad school yet since I'm entering this year. Therefore, when I do get my loans, the interest for staffords would be fixed at 6.8%. Then what should I do? Consolidate my unsub loans from grad school with my undergrad? Or consolidate all my loans (sub and unsub) together? When should I consolidate them...right when i get it or after I'm done w/ school? Or should I just not consolidate them together? I believe I have 6k at 4.75% for undergrad loans and I think they gave me about 30k for grad loans for my 1st yr. How many times can you consolidate the loans? Sorry...new to consolidating...

 

[usrael]

I just consolidated my undergrad loans, but I haven't obtained my loans for grad school yet since I'm entering this year. Therefore, when I do get my loans, the interest for staffords would be fixed at 6.8%. Then what should I do? Consolidate my unsub loans from grad school with my undergrad? Or consolidate all my loans (sub and unsub) together? When should I consolidate them...right when i get it or after I'm done w/ school? Or should I just not consolidate them together? I believe I have 6k at 4.75% for undergrad loans and I think they gave me about 30k for grad loans for my 1st yr. How many times can you consolidate the loans? Sorry...new to consolidating...

Unfortunately there is no more in-school consolidating after June 30th.
Theoretically you can consolidate your medical school loans within 120 days (or 180...not sure) along with the undergrad loans you just took care of. would this make sense? no, because the weighted avg. would raise your interest rate above the 6% mark (i didn't do the math) for the total sum.
Looks like we are stuck with the 6.8% rate for grad school

 

[sna]

if the loan interests are weighted avg, won't it bring it slightly lower than 6.8% and that it would be better in the long run?? I don't know...I'm was never good with finances. Does anyone know what's the best way??

 

[usrael]

if the loan interests are weighted avg, won't it bring it slightly lower than 6.8% and that it would be better in the long run?? I don't know...I'm was never good with finances. Does anyone know what's the best way??

hi again,

you're right about lowering the 6.8% on your first semester stafford loans . But you would be raising your undergrad loans, currently locked at 4.7%, to the same 6ish%. By the way I just read that you need to add on another 0.125% when you consolidate.
I don't see the logic, although I'm in the same boat.
I have 13k in subs. undergrad loans ...and 4.25k subs. + 13k unsub. in Medical school loans (first semester). The new interest rate if i were to consolidate all these loans would would be around 6% like yours...
Pro's- the unsub. (13k) will accrue only 6% as opposed to 6.8%
con's- 1) at repayment my 13k from undegrad will accrue 6% instead of 4.7
2) my T.H.E. bonus goes down from 1.3% to 0.75% annualy.
3) I lose 6 month grace period on a total of 30k.

It doesn't make sense to consolidate the med-school loans with undergrad.
I think i'll stick with the undergrad consolidation.


hope this helps!

 

[OSUdoc08]

hi again,

you're right about lowering the 6.8% on your first semester stafford loans . But you would be raising your undergrad loans, currently locked at 4.7%, to the same 6ish%. By the way I just read that you need to add on another 0.125% when you consolidate.
I don't see the logic, although I'm in the same boat.
I have 13k in subs. undergrad loans ...and 4.25k subs. + 13k unsub. in Medical school loans (first semester). The new interest rate if i were to consolidate all these loans would would be around 6% like yours...
Pro's- the unsub. (13k) will accrue only 6% as opposed to 6.8%
con's- 1) at repayment my 13k from undegrad will accrue 6% instead of 4.7
2) my T.H.E. bonus goes down from 1.3% to 0.75% annualy.
3) I lose 6 month grace period on a total of 30k.

It doesn't make sense to consolidate the med-school loans with undergrad.
I think i'll stick with the undergrad consolidation.


hope this helps!

I agree. You should not reconsolidate loans that are already consolidated (at least until you begin repayment.) The consolidations should remain seperate as to retain their interest rate.

If you did not consolidate your undergrad loans, however, then they need to be consolidated with your med school loans within the next couple of weeks.

 

[sna]

so i should keep the undergrad loan consolidation separate from the grad loans. What should I do with the grad loans once I graduate and enter repayment? Should I consolidate my grad loans (stafford + perkins) all together or keep them separate? Is it possible to have 2 separate loan consolidations, one with just undergrad loans and one with just grad loans??

 

[OSUdoc08]

so i should keep the undergrad loan consolidation separate from the grad loans. What should I do with the grad loans once I graduate and enter repayment? Should I consolidate my grad loans (stafford + perkins) all together or keep them separate? Is it possible to have 2 separate loan consolidations, one with just undergrad loans and one with just grad loans??

Once you graduate, you can consolidate all of your Stafford loans from undergrad. and grad. school together.

I consolidated them all together initially in medical school, but if you have already consolidated once, there is no need to do it again until you graduate.

I would do more research before deciding to combine the Perkins with the Stafford.

 

[miggy]

Hello! Please help me. Is anyone here willing to help me in applying in a loan for international students? I need a U.S. citizen to be my cosigner for the loan I am applying for. I do not know anyone from the US who can be my cosigner. Where can I find cosigners who can help me? Please help me.

 

[OSUdoc08]

Hello! Is anyone here willing to help me in applying in a loan for international students? I need a U.S. citizaen to be my cosigner for the loan I am applying for. Please help me.

 

[DrA]

How do you choose the lender to consolidate with? Does it depend on what type of loans you have? (I have sub stafford)
This whole consolidation thing is so confusing

 

[OSUdoc08]

How do you choose the lender to consolidate with? Does it depend on what type of loans you have? (I have sub stafford)
This whole consolidation thing is so confusing

T.H.E. is the best

http://www.northstar.org

 

[DrA]

T.H.E. is the best

http://www.northstar.org

Thanks

Im wondering... what makes it the best? In what ways do they differ?

 

[migs03]

Sorry...
I'll just repost it without shouting...

Hello! Please help me. Is anyone here willing to help me in applying in a loan for international students? I need a U.S. citizen to be my cosigner for the loan I am applying for. I do not know anyone from the US who can be my cosigner. Where can I find cosigners who can help me? Please help me.

 

[OSUdoc08]

Thanks

Im wondering... what makes it the best? In what ways do they differ?

It's all on the website. Take a look for yourself.

 

[twester]

In my case, I elected not to consolidate my Perkins loan. The interest rate is fixed at 5% and my Staffords will consolidate at 4.7%. The savings wouldn't have been noticable. I'll consolidate them all into one when I graduate.

I did include the Perkins loan in the repayment scheme by listing it in the "Loans I do not want to consoidate" section of my application.

 

[DrA]

It's all on the website. Take a look for yourself.

I did take a look. I dont see what makes it "THE BEST".

 

[It'sElectric]

I did take a look. I dont see what makes it "THE BEST".

I'm not going to recommend any particular lender, but I would take OSUDoc's advice to mean that you could do a bit of research and make comparisons between lenders.

Numerous lenders have been named on this forum, and I'm certain you could find others via the internet. Just make some comparisons and determine which lender works best for you.

 

[DrA]

I'm not going to recommend any particular lender, but I would take OSUDoc's advice to mean that you could do a bit of research and make comparisons between lenders.

Numerous lenders have been named on this forum, and I'm certain you could find others via the internet. Just make some comparisons and determine which lender works best for you.

Well, if anyone is gonna suggest a lender to be the best, you'd think they would provide a reason. If you're going to tell me to do my own research (which I already did before I asked), then don't even recommend anything because you are not helping at all. Thanks for trying to help though, Electric.