Loan consolidation

[migraineboy]

With new all-time low interest rates on the way July 1st, I am thinking seriously about consolidating my Stafford loans. With the research I have done so far, it appears that SallieMae has perhaps the best deal going as far as benefits. Just curious if anyone else out there was considering this option, and if so, what have you found as far as good consolidation programs.

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[paean]

What are SallieMae's benefits for consolidation? I'm familiar with their Stafford loan incentives (good, but not great).

THE gives you a 0.75% principle reduction every year you pay on your consolidated loan, which was the best one I remember. <www.northstar.org>

Smart move consolidating. Make sure you wait until the new interest rates go into effect (I think July 1st, even though they publish them June 1st, no?)

 

[migraineboy]

SallieMae was offering a .25% reduction on interest rate for electronic payment + a 1% reduction on interest rate after 48 consecutive on-time payments (which is pretty much a given if you use the electronic payment). I figure if the interest rate will actually be 4.06% like I see reported everywhere, you could potentially be paying 2.81% after four years (just when I finish residency). I still need to find out if I would qualify for a .6% reduction because I would consolidate during my 6-month grace period. I will have to check out the northstar website you posted. Most places I look at state that even if you apply now, they will wait on payment until after July 1st so you can take advantage of the new lower interest rates.

 

[paean]

Thanks for the SallieMae info migraineboy. My question for you: how long will it take you to pay off your loans? Getting .25% now and 1.25% later may be better than .75% now with no reduction later may be better, but it might not. I encourage you to plug the numbers into a loan calculator (make sure to specify that you want the whole schedule, so you know how much principle you have left in four years when the reduction kicks in), to see which is a better deal. Another question, will the lower rates later offset the higher ones during residency when your income is lower?

 

[LoanGrl]

Where ever you choose to consolidate your loans, be sure to read the fine print! Sometimes it can throw you into repayment early; if you can afford to be in repayment, fabulous! You're saving money by repaying early! But if you are in an internship and residency and you will be in financial straits, it might not be such a good idea. You might not qualify any longer for deferment or forbearance, and you don't want to end up in default. So make sure you know what you are going to be earning, and know what your payments are going to be. I always like to know all the facts before I sign on that dotted line. Good luck! :wink:

 

[Anath]

Migraineboy -- you also need to be careful. From what I recall about Sallie Mae and what the guy told me over the phone, if you consolidate your loans, then you lose most of those benefits. Those benefits apply to individual loans seperately. If you don't consolidate, you also need to note that there are dates for each benefit, so those benefits do not apply to each stafford loan you took out. Look at the dates carefully ... they're so easy to skip over. Basically, what hte guy told me over the phone was that if I consolidated, I would lock in the low interest rate, but I would lose all the other perks except for the 0.25% reduction for electronic payment. Oh yea! And after 4 years, you get a 1% reduction instead of the 2% that you could get under one of their other benefits that apply to individual loans.

 

[Anath]

whoops! Ignore me -- you *did* mention the consolidation terms and not the individual terms. What in the world was I reading?

I was thinking of consolidating my loans also.

 

[Anath]

Ah! I had conversations with a ton of people today about consolidating. I wanted to know if it would be possible for me to consolidate my UG stafford loans. Quick answer: Yes. Remember that if all your UG (I think you're talking about UG loans) are all with one lender, then you have to go with that lender for consolidation purposes. Hence, whether I want to or not, I'm gonna be going with Sallie Mae to consolidate my UG loans. Now, when I graduate from medschool, I'm going to conslidate my *med school* stafford loans using THE's consolidation program. (I'll end up with 2 consolidated loans). I didn't think this would be possible, but after talkign to several lenders abut it, they all assure me I'm set ta go. Ah, today was a good day. But anyhoo ...

One problem you might face (depending on how much you took out during UG) is that if you consolidate now, your repayment starts right when you graduate from medschool. Meaning that you have to start paying those consolidation loans during residency. Because of this, you also might *not* want to consolidate your med school loans when you graduate b/c they require that you start paying. Instead of consolidating, you should defer. You're allowed to defer for 3 years for residency (with Sallie Mae. With T.H.E. it's actually 42 months).

One reason that I do not want to consolidate my UG loans and my med school loans is that if you lump them together under one lender, they are going to average the two, and then round it to the nearest 1/8%. I want to keep my low interest rates that are around right now. And often times, when you bring in loans from other lenders, the perks are not as great as those you would get if all your loans were with that same consolidating company.

 

[detm78]

Might this be helpful? It is from the AAMC site:

<a href="http://www.aamc.org/students/medloans/loanconsolidation/primer.htm" target="_blank">http://www.aamc.org/students/medloans/loanconsolidation/primer.htm</a>

 

[missbonnie]

I just did it (well need to sign stuff first) for my undergrad loans. I had 4 loans (one for each yr).

BTW, interest rates are at an all time low (in 36 yrs or sumthing like that), around 4%. I reduced my interest from 6.6 to 4.6 It will go down another ..25% if I opt for the automatic payment (I'm not too keen on that), and after 36 payments, it will go down to 3.6% (1 %).

Loan consolidation is a FEDERAL program, so it's not exclusive to any bank and there are no fees at all to do this. I believe different banks will package it differently.

Migraineboy-
My student loans were from citibank so I just did it through them,. Call 866-924-2793 and they can answer all your questions. Ther person I talked to was very knowledgabke about the sbject. Have your student loan info in front of you so you get the full picture before doing this.

I highly recommend doing this - it SAVES money. The new intrrest rate is locked for the remainder of the repayment period -- stays the same even if the rates goes up (most likely). Once I go back to school full time (med school) it will be in deferrment.

 

[Anath]

Miss Bonnie -- remember, you still have to pay interest (if you have unsubsidized) during med school

 

[missbonnie]

I have subsidized

But yes, for those that have un-subsidized, you still have to make interest payments.

 

[mompremed]

Originally posted by missbonnie
I have subsidized

But yes, for those that have un-subsidized, you still have to make interest payments.

I just checked on that and while you CAN pay interest, you don't have to. It just accrues and then capitalizes just like in Undergrad.

Also, if you consolidate now, you can still defer for residency. There is something called "medical residency forbearance" which apparently most lenders aren't telling residents about. But before that, it is better to ask for economic hardship deferment, if you have a high amount of loan debt (most of us will). You can get 3 yrs worth of that. Also there are programs for fellowship forbearance/deferment, at least with my loan company.

I am going with College Loan Corp. 1-888-972-6311.
Talk to Gisele at ext. 2155 if you need to look into this. She is very knowledgeable and I got the best deal of all from her. My loans came out of the grace period before 7-1 and she showed me how to put them into forbearance (very easy to do) so we could get into the low interest. I talked with several different loan companies, including Sallie Mae, and not one of them suggested, or even hinted that I could do this to get the low interest rates. (This was back in late April.) Every other loan company I talked to, besides College Loan Corp., was just going to consolidate my loans at the then-higher rate and didn't even tell me the rates were going down 7-1, let alone help me get those rates.

Needless to say, I'm glad I made the call to CLC.

Oh, and another advantage to consolidating the UG loans. It makes your loan debt monthly pmt look a LOT smaller on your credit report. My "proposed" monthly payments will go down from $800+/month to ~$300/mo. Even in deferment, that looks a lot better to a creditor. You never know when you may need to borrow $1500 for a clunker to get around in, or a transmission or something! (Heaven forbid, of course, but you never know.) I need to refinance my house to pay my UG private loans so I'm really sensitive to what potential creditors are looking for. Debt-to-income ratio is a biggie, and although it may not be a problem for some of the younger single people w/o children, for those of us who are single parents, or are married with a working spouse....well, it just looks better to have that lower monthly amount because that's one of the first things creditors look at, right after bad debts, etc.

Cheers,

mompremed
(Soon to be MedStudentMom)

UHS, Class of 2006

 

[Steve22]

I read the post Loan consolidation. It is very nice....

 

[TMP-SMX]

You joined the forums to commend a 6 year old post?

 

[starrfishes]

Sorry if this sounds too easy of a question to answer but I'm curious...

First off, the only thing I know is that when you are temporarily not making any student loan payments because you're in school, in deferment or forbearance, Grad Plus loans will still be accruing interest. So, of course, any unpaid interest will be added to the principal of your Grad Plus loan.

Now my question is, when you decide to consolidate all your loans immediately after graduation, will you be on a new set of terms with the consolidation loans, or would you, on top of the new consolidation terms, still pay for all the previously accrued unpaid interest that you had not paid while in school?

Responses will be greatly appreciated