Loan consolidation - Perkins loans?

[rad0nculous]

I am finishing up my last year of medical school and graduating with about $185K in unsubsidized Stafford loans (grace period of 6 months after graduation, weighted interest rate of about 5.8%) and about $10K in Perkins loans (5%, not accruing interest currently, in grace period for 9 months after graduation).

I am thinking of consolidating loans so that I can take advantage of REPAYE to reduce my interest accrual and waive the grace period on the Stafford loans. However, I see little advantage to including my Perkins loans in the consolidation, as they are not accruing interest currently and are at a lower rate than my other loans. Including them would simply add them to my principal at the rounded, weighted average rate (which will be 5.875%).

My question is: is it possible to exclude Perkins loans from consolidation and still be able to forgo the grace period / use REPAYE for my consolidated Stafford loans? Is this advisable?

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[TMP-SMX]

What's your plan for repayment after residency? I assume you have all direct loans already? Do you have a spouse that works? Other loans to worry about? It would simplify repayment but as you stated your interest would be slightly higher due to rounding.

 

[RangerBob]

I am finishing up my last year of medical school and graduating with about $185K in unsubsidized Stafford loans (grace period of 6 months after graduation, weighted interest rate of about 5.8%) and about $10K in Perkins loans (5%, not accruing interest currently, in grace period for 9 months after graduation).

I am thinking of consolidating loans so that I can take advantage of REPAYE to reduce my interest accrual and waive the grace period on the Stafford loans. However, I see little advantage to including my Perkins loans in the consolidation, as they are not accruing interest currently and are at a lower rate than my other loans. Including them would simply add them to my principal at the rounded, weighted average rate (which will be 5.875%).

My question is: is it possible to exclude Perkins loans from consolidation and still be able to forgo the grace period / use REPAYE for my consolidated Stafford loans? Is this advisable?

Unfortunately I tried to forgo my grace period and my lender would not let me. The only way to know for sure is for you to contact your loan servicer, but I am guessing you can't skip out on it.

 

[TMP-SMX]

Unfortunately I tried to forgo my grace period and my lender would not let me. The only way to know for sure is for you to contact your loan servicer, but I am guessing you can't skip out on it.

One way to do it if you don't have all direct loans is to consolidate to direct loans. This puts you into repayment immediately.

 

[RangerBob]

One way to do it if you don't have all direct loans is to consolidate to direct loans. This puts you into repayment immediately.

True--you can do this even if you do have direct loans (they would just become part of the direct consolidation loan).

However, I didn't want to consolidate my non-direct loans, because I wanted to be able to selectively pay off the higher interest rate loans, as I wasn't confident I'd be eligible for PSLF as an attending (or that it would stick around).

 

[TMP-SMX]

True--you can do this even if you do have direct loans (they would just become part of the direct consolidation loan).

However, I didn't want to consolidate my non-direct loans, because I wanted to be able to selectively pay off the higher interest rate loans, as I wasn't confident I'd be eligible for PSLF as an attending (or that it would stick around).

If you don't want to consolidate your non-direct loans you might as well refinance after your credit is better as an attending with more income. Take advantage of the low payments and some of the generous interest benefits of REPAYE. Feel free to pay more during residency on the higher interest loans if you can afford to do so but don't bypass any free money you get from matching 401k/403b. The first year of medical school also gives you some perks like the saver's credit you will never qualify for the rest of your life. Roth IRAs are good ideas as well if you can afford it.

 

[RangerBob]

If you don't want to consolidate your non-direct loans you might as well refinance after your credit is better as an attending with more income. Take advantage of the low payments and some of the generous interest benefits of REPAYE. Feel free to pay more during residency on the higher interest loans if you can afford to do so but don't bypass any free money you get from matching 401k/403b. The first year of medical school also gives you some perks like the saver's credit you will never qualify for the rest of your life. Roth IRAs are good ideas as well if you can afford it.

I worded my sentence wrong--I meant to say I didn't want to consolidate my direct loans. I consolidated only my non-direct loans so all my loans would be in the direct loan program and eligible for PSLF/REPAYE.

I am considering refinancing my loans, but I want to wait at least a year or two after I start my job to make sure I like it, since consolidating now gives up the possibility/benefits of PSLF/REPAYE.