who did u consolidate with???

[bababuey]

Just wanted to see who people consolidated their loans with... and what their APR and other benefits they received...

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[somdave2005]

Just wanted to see who people consolidated their loans with... and what their APR and other benefits they received...

I'm in the process of consolidating with UHEAA. After reductions and 48 ontime payments, my interest rate will be .625. Only disadvantage is that they don't amortize the loans.

 

[xampower]

I am pulling the trigger and consolidating through graduate leverage. The loan will be consolidated with AES. UHEAA has a nice deal but for me I will lock in at 1.67%, I have it in writing that the loan will never be sold (UHEAA will not promise this, therefore there is a chance that if it is sold you lose the benefits), GL/AES amortizes the loan (with UHEAA you pay the same monthly payment even after you get the interest decrease from on time payments. Therefore you are paying the loan off earlier - instead of getting the full 30 years.), GL/AES only require 20 ontime payments to get the 1% decrease, finally if you watch the GL informational video their success rate for deferment over forebearance is 90% vs the 50% national avg (they work with you to get you deferment). I think amortization is key. By having a lower monthly payment I can take the difference and invest this money at a much higher rate than 1.67% Like I said the UHEAA is nice but I prefer GL/AES for security.

 

[chicamedica]

So am I looking into loan consolidation, but am still very confused about whether i can do this. I'm going to start MS4 in June, 2005. So far the consolidation offers/advertisements i have seen say things like i have to be done receiving all my loans before i apply (for inschool consolidation, i can only apply after my last loan has been disbursed--which for me will be Jan/Feb 2006, too late).

Also, my understanding is that once you consolidate you get a perk of 6-month grace period. Assuming i'm qualify for consolidation in the first place, i don't see whether it's to my advantage, b/c i'm planning on keeping my loans in deferment for at least another year, if not through residency. And it's not just a matter of me planning--there is simply no way i can possibly afford loan payments while i'm an MS4. Also, i'm entitled to an 8-month grace period with either the perkins or stafford (i forget which). I mean, it's nice to have an interest rate of ~1%, but 5% max with perkins or 8% max with stafford really isn't that bad in the big picture, imo, especially if i can just pay it off really quick when i have the funds to do that.

But if i'm not understanding this correctly, let me know b/c if i can get my loans consolidated at this point and still defer my consolidated loans for at least another year, I'd prefer getting the lower interest rate.

 

[argh]

So am I looking into loan consolidation, but am still very confused about whether i can do this. I'm going to start MS4 in June, 2005. So far the consolidation offers/advertisements i have seen say things like i have to be done receiving all my loans before i apply (for inschool consolidation, i can only apply after my last loan has been disbursed--which for me will be Jan/Feb 2006, too late).

Also, my understanding is that once you consolidate you get a perk of 6-month grace period. Assuming i'm qualify for consolidation in the first place, i don't see whether it's to my advantage, b/c i'm planning on keeping my loans in deferment for at least another year, if not through residency. And it's not just a matter of me planning--there is simply no way i can possibly afford loan payments while i'm an MS4. Also, i'm entitled to an 8-month grace period with either the perkins or stafford (i forget which). I mean, it's nice to have an interest rate of ~1%, but 5% max with perkins or 8% max with stafford really isn't that bad in the big picture, imo, especially if i can just pay it off really quick when i have the funds to do that.

But if i'm not understanding this correctly, let me know b/c if i can get my loans consolidated at this point and still defer my consolidated loans for at least another year, I'd prefer getting the lower interest rate.

chicamedica,

since you're still in school, the only people you can consolidate with is the gov't, and only if you meet one of their criteria (one is having direct stafford loans, another is attending a school that gives out direct stafford loans, and there is at least one other that you can fall under). The incentive for those in school to consolidate what loans they have right now is that you lock in the current stafford rate at 2.875% on that consolidation loan (because the current 2.77% is rounded up to the nearest eighth of a percent). If you just let it go until July 1, you stafford rate will jump a couple percentage points (I'm hearing to 4.5% or higher). You can defer the consolidation loan while you're in school, and you'll still have a six-month grace period once you graduate.

And as for the arguments about 8% interest not being bad, they're not horrible, but you can do a lot better currently. There's a cost to using your money to pay off education loan interest when you can use it to invest in something that will appreciate in value (e.g. real estate, stocks, or that Picasso you've had your eye on).

 

[chicamedica]

chicamedica,

since you're still in school, the only people you can consolidate with is the gov't, and only if you meet one of their criteria (one is having direct stafford loans, another is attending a school that gives out direct stafford loans, and there is at least one other that you can fall under). The incentive for those in school to consolidate what loans they have right now is that you lock in the current stafford rate at 2.875% on that consolidation loan (because the current 2.77% is rounded up to the nearest eighth of a percent). If you just let it go until July 1, you stafford rate will jump a couple percentage points (I'm hearing to 4.5% or higher). You can defer the consolidation loan while you're in school, and you'll still have a six-month grace period once you graduate.

And as for the arguments about 8% interest not being bad, they're not horrible, but you can do a lot better currently. There's a cost to using your money to pay off education loan interest when you can use it to invest in something that will appreciate in value (e.g. real estate, stocks, or that Picasso you've had your eye on).

Oh wow, thank you so much for the explanation! What name does the governmental consolidation go by? It isn't the "Federal Direct Loan Consolidation" b/c they had that rule that excluded me. I mean, they have "in-school consolidation" but it can only be done after my last loan is disbursed. I can't seem to identify the gov't programs on google, b/c they all say "federal"

Also, can I defer a consolidated loan thru residency too if need be?

 

[argh]

I'm going to go with GL and AES to consolidate because I'm hoping the growth on all the money I won't be spending on monthly payments with UHEAA will outpace the savings on the back end of a UHEAA loan over AES.


Here's my argument:

**WARNING**
long post, lots of numbers and sleep-inducing math

here's the website where I pulled some formulas to figure out amortization schedules and various scenarios:

http://ray.met.fsu.edu/~bret/am_derive/derivation.html

Let's say you start with 160k in stafford loans at 2.77%, you'll have a max of 30 years to pay it off. Your consolidation interest rate is 2.875%

monthly payments on this loan would be $663.83 - this would be your monthly payment with UHEAA and anybody else who doesn't re-amortize the loan after interest rate reductions.

monthly payments on a loan with AES would be at .25% less initially, and so they would be $642.64 - keep in mind that's $21.19 less per month initially because we'll come back to that

after 20 payments, an extra 1% interest rate reduction with AES kicks in, and so monthly payments would drop down to $565.57, or $98.26 less than the UHEAA payments

meanwhile, if you're with UHEAA, you're paying off ever more extra principal as your interest rate drops from 2.875% to 1.625% then .625%. If everything goes as planned, you get done paying off your loan in 23 years, and you've paid about 23k in interest

If you're with AES, you take the full 30 years, and even with an interest rate of 1.625%, you've still paid about 45k in interest, or 22k more than UHEAA. That sucks right? But wait, there's all that money you didn't pay AES that you would have with UHEAA...

so, let's say you invest that extra $21 monthly and then $98 monthly (and yes, you'd have to be pretty good about this in order for it to work). If you invest it in something that yields about 7% interest (which I think is a pretty conservative expectation, as the s&p 500 has gained about 10% annually on average the last 30-40 years - feel free to disagree), you'll have $59k when UHEAA guy has finished paying his/her loan. Now, let's say UHEAA guy invests that $663/month that he/she was paying. Yes, he/she will begin to catch up, but at the end of 30 years (the end of the life of the AES loan), the score will be AES 108k, UHEAA 71.7k, a difference of 36k+, and 14k more than the difference of the interest payments between the two loans.

the thing that complicates this even more is taxes. we get deductions for paying interest, but would have to pay taxes on capital gains and things. However, the lack of threat of loan selloff, promise of maintenance of interest rate reductions, and ability to consolidate Perkins loans at the current stafford rate rather than 5% is what sealed the deal for me.

 

[argh]

Oh wow, thank you so much for the explanation! What name does the governmental consolidation go by? It isn't the "Federal Direct Loan Consolidation" b/c they had that rule that excluded me. I mean, they have "in-school consolidation" but it can only be done after my last loan is disbursed. I can't seem to identify the gov't programs on google, b/c they all say "federal"

Also, can I defer a consolidated loan thru residency too if need be?

I feel like I'm monopolizing the thread, but here's my answer:

There are two kinds of consolidation programs, one through the gov't ("direct loan consolidation") and through the private sector ("federal loan consolidation"). you can't consolidate through the private sector while you're in school, but you can with the government.

http://loanconsolidation.ed.gov is the link

you can defer during residency using economic hardship deferment if you've got enough in loans.

http://forums.studentdoctor.net/showthread.php?t=183903 this was a pretty good thread on loan consolidation

 

[chicamedica]

I'm going to go with GL and AES to consolidate because I'm hoping the growth on all the money I won't be spending on monthly payments with UHEAA will outpace the savings on the back end of a UHEAA loan over AES.

....

the thing that complicates this even more is taxes. we get deductions for paying interest, but would have to pay taxes on capital gains and things. However, the lack of threat of loan selloff, promise of maintenance of interest rate reductions, and ability to consolidate Perkins loans at the current stafford rate rather than 5% is what sealed the deal for me.

Yeah i understand the logic about investing the difference and ending up with more in the long run, and it's a great plan. Me personally, I just prefer to pay off all my loans ASAP so they're not hanging over my head. I'm not that great with investing, and things like stocks are a risk in and of themselves that i'm not sure i'd be willing to take with this money, and like you say taxes could end up evening out the pro's and con's to this.

Anyway, a couple more questions:
What do GL, AES, and UHEAA stand for? I'm not sure what those names are.

Also, i was just reading (on Sallie Mae's site, i think) that if i consolidate my Perkins loans along with the Stafford, it will no longer be subsidized. Not sure if it's worth obsessing over though. . .I may go for the income-dependent repayment and just start repaying during residency.

Ok, and I think i understand what the Federal Direct Loan Consolidation ppl mean by the inschool consolidation requiring the last loan be fully disbursed. But that means if I consolidate now, I will have to leave out my huge stafford loan from my last semester, right? and i won't be able to reconsolidate unless i want to lose all the benefits of having consolidated now.

Am I right?

 

[chicamedica]

I feel like I'm monopolizing the thread, but here's my answer:

There are two kinds of consolidation programs, one through the gov't ("direct loan consolidation") and through the private sector ("federal loan consolidation"). you can't consolidate through the private sector while you're in school, but you can with the government.

http://loanconsolidation.ed.gov is the link

yes, you can consolidate during residency, and you can actually consolidate whenever you want. It's advantageous to consolidate during deferment, grace, or enrollment because stafford loan rates jump up .6% when you're in repayment.

no not at all, thanks very much for monopolizing!! I really appreciate your advice b/c I know NOTHING about this.

actually, my question was regarding deferment, not consolidation, in residency (if i consolidate now). If i consolidate i should do it now, as my 4th year of med school is beginning. Otherwise this wouldn't be an issue.

 

[HeyDoc]

So when (date please) do we know if the interest is going to go up or down for next year??? I was told the t-bill or whatever is supposed to come out this month. I'm just waiting for this moment.

thanks

 

[DRealDrZ]

I think the date is July 1...also, I've looked and asked before, but how do you consolidate and then apply for hardship for residency? I may be a doc, but I can't figure this out

 

[kas23]

For HeyDoc, July 1st, 2005.

Now for my questions. I have been looking into GL consolidation service for AES and have some concerns. I got to the end of the application, the point where they say give us your electronic signature, and still nowhere did I have any evidence that they were going to calculate my rate with Perkins being 2.77%. I went through the whole process and they only calculated my rate with the Perkins being 5%. This is not what the GL Recommendation e-mail to me. I would not like to sign anything unless it says in the application I am signing they would drop the Perkins rate down to 2.77%. Sorry, I just don't trust these kinds of people.

Second, AES consolidation will not re-amortize your loan payment for at least 20 months, not when you get your 0.25% rate reduction for electronic payments. It says in my GL Recommendation e-mail: "True Rate Reduction. Once your incentive is attained (reducing in-grace Stafford Rates to 1.625%), your monthly payment will be reduced commensurately." To me, this reads that I will have to wait until my rate is reduced to its fullest (1.625%) (in 20 months) before my monthly payments will be reduced. Please correct me if I am wrong.

My third problem is their payment schedule plans. They only offer a graduated "alternative" 5 year plan. Which means you pay a certain sum for 3 years, then it goes up quite a bit for 2 more years, and finally it reaches its highest payment at year 6. Sallie Mae offers a plan where your payments are low for 5 straight years, then it bumps up to the highest payment.

And the point Argh made about paying capital gains taxes is a very significant one and should not be brushed off lightly. The government taxes the bejesus out of capital gains income, especially if you are in a tax bracket of a physician. The idea of one making a net amount of money by investing instead of paying back educational loans is debatable due to taxes one would have to pay for capital gains. And even if one did gain money, would it be a significant amount? Or, are we talking $15000 over 30 years? However, if you invested your money into a Roth, then you would not have to pay taxes on capital gains and you would definitely come out on top here. And you could also put your saving into a 401(k) retirement account and would only have to pay capital gains within a much lower tax bracket.

 

[argh]

the new rate goes into effect on July 1, but I think it's announced at the end of may or early june. the rate's based on the closing price of the 91-day t-bill or something or other the last week of May. based on the multiple interest rate hikes by the fed in the past year, it's all but done that the stafford rate will go up.

The Perkins thing does sound alarming.

I would argue that if we can't get much out of 15k after 30 years, then the 20k difference in interest shouldn't register any differently. Personally, I'd be pretty disappointed with 7% annual return. If return is higher, that difference would grow (it's 78k assuming 10% return on average). Even with capital gains taxes at the highest tax bracket, there would still be a difference of 50k. However, this assumes that

1. UHEAA will maintain their benefits (if they sell the loans, this makes it less likely)
2. AES gives a rate reduction from the very first payment and amortizes accordingly for electronic debiting.

We know from one of the posts above that UHEAA won't make guarantees from the loan selling front, now I just need to know what the mechanics of AES' rate reductions are, since they might not be the obvious thing. (as an exercise, I did check how much interest changes without a .25% rate drop initially, and it's pretty imperceptible - under $1000 - which makes sense because it's 20 bucks x 20 payments)


ADDENDUM:
I called GL. The .25% is effective immediately. However, the Perkins benefit is a double-edged sword. Really, what happens is that the Perkins is weighed at 5% in calculating the overall rate, and then there is a rate reduction that's applied so that it reflects the what the rate would be if there were only stafford loans. So, you might be at 3.125% with the Perkins figured, and then get .25% knocked off so that you'd be 2.875%. The condition you have to meet is on-time payments. If you're late (more than 15 days past the due date is the definition, I think), then your rate gets jacked up quite a bit. Kinda sucks. But I'm still going with them, and it's a question of whether I want to do the Perkins loans as well.

 

[seizure415]

Oooh, ooh, I'm getting so much out this discussion... I love it!

Now my question, what options do I have for consolidating or locking in rates for HEAL loans? Unfortunately, I had to take out a few of them during school and I'm getting queasy worrying when/if the interest rates start climbing. As far as I'm aware, not every company will consolidate HEAL loans, and some of those that do won't lock in your rate. The one's that "promise" to lock your rate seem kinda sketchy to me.

Short of funnelling most of my income into those loans, what does anyone suggest?

 

[chicamedica]

Yeah i understand the logic about investing the difference and ending up with more in the long run, and it's a great plan. Me personally, I just prefer to pay off all my loans ASAP so they're not hanging over my head. I'm not that great with investing, and things like stocks are a risk in and of themselves that i'm not sure i'd be willing to take with this money, and like you say taxes could end up evening out the pro's and con's to this.

Anyway, a couple more questions:
What do GL, AES, and UHEAA stand for? I'm not sure what those names are.

Also, i was just reading (on Sallie Mae's site, i think) that if i consolidate my Perkins loans along with the Stafford, it will no longer be subsidized. Not sure if it's worth obsessing over though. . .I may go for the income-dependent repayment and just start repaying during residency.

Ok, and I think i understand what the Federal Direct Loan Consolidation ppl mean by the inschool consolidation requiring the last loan be fully disbursed. But that means if I consolidate now, I will have to leave out my huge stafford loan from my last semester, right? and i won't be able to reconsolidate unless i want to lose all the benefits of having consolidated now.

Am I right?

Argh, please answer my questions!! pretty please!

 

[GeneGoddess]

GL: graduate leverage (www.graduateleverage.com): a "union" for student loan consolidation.
AES: American Education Services: a loan consolidation company that GL is recommending.
UHEAA: Utah Higher Education Assistance Authority: another consolidation company.

 

[chicamedica]

GL: graduate leverage (www.graduateleverage.com): a "union" for student loan consolidation.
AES: American Education Services: a loan consolidation company that GL is recommending.
UHEAA: Utah Higher Education Assistance Authority: another consolidation company.

Thanks! are these all government consolidation companies?

 

[Mirror Form]

Now for my questions. I have been looking into GL consolidation service for AES and have some concerns. I got to the end of the application, the point where they say give us your electronic signature, and still nowhere did I have any evidence that they were going to calculate my rate with Perkins being 2.77%. I went through the whole process and they only calculated my rate with the Perkins being 5%. This is not what the GL Recommendation e-mail to me. I would not like to sign anything unless it says in the application I am signing they would drop the Perkins rate down to 2.77%. Sorry, I just don't trust these kinds of people.

I called the GL people and they said that the online program just wasn't sophisticated enough to make the perkins loan calculation.

And the point Argh made about paying capital gains taxes is a very significant one and should not be brushed off lightly. The government taxes the bejesus out of capital gains income, especially if you are in a tax bracket of a physician. The idea of one making a net amount of money by investing instead of paying back educational loans is debatable due to taxes one would have to pay for capital gains. And even if one did gain money, would it be a significant amount? Or, are we talking $15000 over 30 years? However, if you invested your money into a Roth, then you would not have to pay taxes on capital gains and you would definitely come out on top here. And you could also put your saving into a 401(k) retirement account and would only have to pay capital gains within a much lower tax bracket.

I did the calculation via Excel (it's easy to do, you all should learn how to figure out interest payments and whatnot on your own) and found that I'd come out WAY AHEAD by investing the extra capital from GL's lower monthly payments, (assuming a 6% annual return, which is a conservative estimate).

Capital gains taxes won't be that bad if you're smart about investing. Obviously the retirement funds (ira's and 401k) are one possibility. Regardless though, you don't pay any capital gains on a stock until you sell it. So if you just buy into some index funds, your tax drag will be insignificant. Or better yet, just make some personal funds that mimic the index funds. Then, you can save thousands by selling your losers at the end of the year, calling it a capital loss, and then buying them back a month later.

Yes you'll pay capital gains when you finally sell, but those don't come very close to evening the gap b/w UHEAA and GL (at least in my calculations).

 

[somdave2005]

Alright, you guys are starting to make me think about switching back to GL again. Just a few questions, esp for aargh.

1. GL only comes out ahead if you invest that extra money from the amortized loan. But investing your money is definitely a risky business. Esp in the hands of a doctor, who as a group are notorious for being bad with their money. So how much risk is really involved even if you invest "conservatively" and invest in a mutual fund to get a 6% annual return? wouldn't it be better for people who are not good investors (like myself) to just take the bigger interest rate reduction and finish off our loans sooner? You invest your money in a 3% high yield account (which i consider a safe investment with no risk involved), UHEAA deal comes out ahead.

2. for GL/AES, will they amortize after your 36 ontime payments too?

 

[argh]

Alright, you guys are starting to make me think about switching back to GL again. Just a few questions, esp for aargh.

1. GL only comes out ahead if you invest that extra money from the amortized loan. But investing your money is definitely a risky business. Esp in the hands of a doctor, who as a group are notorious for being bad with their money. So how much risk is really involved even if you invest "conservatively" and invest in a mutual fund to get a 6% annual return? wouldn't it be better for people who are not good investors (like myself) to just take the bigger interest rate reduction and finish off our loans sooner? You invest your money in a 3% high yield account (which i consider a safe investment with no risk involved), UHEAA deal comes out ahead.

2. for GL/AES, will they amortize after your 36 ontime payments too?

somdave2005,

with regard to point #1, my benchmark as far as success in investing is the s&p 500. I've got most of my investment money in an s&p 500 index fund right now, it's easy, diversified with regard to sectors, and I don't have to think about it. It's not nearly as volatile as investing in individual stocks, and you don't have to track earnings or anything. my take (which I have learned from others) is that if you're not confident you can beat the s&p, you have no business doing something other than the s&p. historically (and with the caveat that past performance doesn't predict future results), the s&p has averaged approximately 10%, but you can't make such a statement year to year. I look for long term gain, and only invest money I won't need in the next few years. I don't have the time to track earnings like some of my business-type friends. we're young, and dollars invested now are more valuable than dollars invested when we're in our 50s, so advice is generally that this is the prime time to be fairly aggressive as far as investing

as for point #2, AES' amortization schedule reflects the .25% drop when you do debiting, and then re-amortized after 20 (and not 36) consecutive on-time payments.

 

[somdave2005]

somdave2005,

with regard to point #1, my benchmark as far as success in investing is the s&p 500. I've got most of my investment money in an s&p 500 index fund right now, it's easy, diversified with regard to sectors, and I don't have to think about it. It's not nearly as volatile as investing in individual stocks, and you don't have to track earnings or anything. my take (which I have learned from others) is that if you're not confident you can beat the s&p, you have no business doing something other than the s&p. historically (and with the caveat that past performance doesn't predict future results), the s&p has averaged approximately 10%, but you can't make such a statement year to year. I look for long term gain, and only invest money I won't need in the next few years. I don't have the time to track earnings like some of my business-type friends. we're young, and dollars invested now are more valuable than dollars invested when we're in our 50s, so advice is generally that this is the prime time to be fairly aggressive as far as investing

Thanks for the response, Argh. You're definitely a better investor than most of us in the medical field. So it sounds like for someone like me (who's still reading Personal finance for dummies. ) Uheaa would be better, si?

Dave

 

[somdave2005]

Oh one more thing to ponder about, if you don't want your loan to be sold, wouldn't the best choice actually be Sallie Mae and not GL/AES? I know i know....GL/AES has the written guarantee but that doesn't cover what happens in the event that AES goes under or gets bought up by a bigger fish like Sallie Mae. My friend read their written promise and it does seem to leave that loophole. Now with Sallie Mae, those mofo won't be selling your loans because they're the big dog and they're the ones less likely to go under or get swallowed up. Why would they be selling your loan if they are busy buying up other people's loans themselves? what do you guys think?

Dave

 

[xampower]

dollars invested now are more valuable than dollars invested when we're in our 50s....

QUOTE]

This is the key concept to this discussion!!! The longer you wait to invest the more money you will have to put into retirement later...most likely double to quadruple what you would put into today depeneding on how long you wait. It is not about how much you put in ...it is a matter of when. Investing is all about time...why?... compounding interest!!!!! Good work argh. By the way I filled out my application yesterday with AES. One of the founders sat on the phone with me for 30 minutes and walked me through every step. There is something to be said about service!!! He gave me his cell phone number and said when October comes give him a call and he will walk me through filling out the paperwork for deferment. They have a 90% success rate with deferment vs the 40% national avg. If you are considering another company with better rates you might fall into the unlucky 40% and not get deferment and end up paying interest on those loans. Do you think these consolidating companies care if you get derement or not. AES provides a service. As a growing company they are bending over backwards for their customers. Guess what...the percentage points you are getting may not help so much after all if you don't get deferment.

 

[somdave2005]

dollars invested now are more valuable than dollars invested when we're in our 50s....

QUOTE]

This is the key concept to this discussion!!! The longer you wait to invest the more money you will have to put into retirement later...most likely double to quadruple what you would put into today depeneding on how long you wait. It is not about how much you put in ...it is a matter of when. Investing is all about time...why?... compounding interest!!!!! Good work argh. By the way I filled out my application yesterday with AES. One of the founders sat on the phone with me for 30 minutes and walked me through every step. There is something to be said about service!!! He gave me his cell phone number and said when October comes give him a call and he will walk me through filling out the paperwork for deferment. They have a 90% success rate with deferment vs the 40% national avg. If you are considering another company with better rates you might fall into the unlucky 40% and not get deferment and end up paying interest on those loans. Do you think these consolidating companies care if you get derement or not. AES provides a service. As a growing company they are bending over backwards for their customers. Guess what...the percentage points you are getting may not help so much after all if you don't get deferment.

How you going to get deferment if you don't even qualify???? Is that 90% success rate for everyone who consolidate or just those that applied for deferment?

 

[kas23]

Has anyone who has consolidated with GL/AES signed an application (electronically or by hand) which states that your Perkins loan rate was reduced to the Stafford rate? I know that someone said that the online application just doesn't show it due to technological reasons, but where there is a will, there is a way. Or, has anyone signed an application that clearly states AES will re-amortize our monthly payments when we qualify for rate reductions? I didn't see this even mentioned on the online application either.

I know I am being a stickler, but these promises were only given to us in the GL Recommendation e-mail and its attached letter (which looked sketchy, by the way) and these are hardly legally binding documents. I can just hear a lawyer saying to me; "But son, this is what you signed. If this is not what they told you, you shouldn't of signed it. Now you have no legal recourse, so you're SOL, son."

 

[xampower]

How you going to get deferment if you don't even qualify???? Is that 90% success rate for everyone who consolidate or just those that applied for deferment?

GL told me that of all the people who consolidated through them and applied for deferment, 90% were granted deferment as opposed to 40% nationally. I assume that nationally of those who apply for deferment only 40% are granted deferment. GL specifically told me that the application for deferment can be tricky and having someone on your side who knows exactly what the qualifaction requirements are tremendously helps the student qualify. I know that I will have people who know this line of business much better than I do review my deferment application before it is submitted. I called several consolidators and all stated that they do not provide this service.

As far as what the exact qualifications are I don't know. I can gurantee that GL probably does. I will rely on them to guide me through the application and hope that I fall in the 90%.

 

[Mirror Form]

Alright, you guys are starting to make me think about switching back to GL again. Just a few questions, esp for aargh.

1. GL only comes out ahead if you invest that extra money from the amortized loan. But investing your money is definitely a risky business. Esp in the hands of a doctor, who as a group are notorious for being bad with their money. So how much risk is really involved even if you invest "conservatively" and invest in a mutual fund to get a 6% annual return? wouldn't it be better for people who are not good investors (like myself) to just take the bigger interest rate reduction and finish off our loans sooner? You invest your money in a 3% high yield account (which i consider a safe investment with no risk involved), UHEAA deal comes out ahead.

If you want to be conservative in investments, there is no reason you'll only be getting 3% That's inflation!!! Only a complete and total IDIOT would be seeing that kind of return in the long run. Trust me, if you got into medical school and want to be conservative with your investing, you WILL do better then 3%. Generally, the people who don't do well are the ones who are too non-conservative in their investments.

It doesn't take a PhD to do well investing either. Just read a small guide on investing (a good one, not the get rich quick ones). I strongly recommend Andrew Tobias' guide for beginners called "The Only Investment Guide You'll Ever Need." It's very well respected and very easy to read. It'll take about a week to get through, and then you should easily be able to get your money to rise along the with stock market's averages over the long run (approx 10% per year over the past 80 years, another way to think of it is that your money will double every 7 years assuming you avoid the tax drag). I just used 6% to be conservative in the estimates. But even with that, you still come out way ahead using GL and investing the extra money.

 

[argh]

Thanks for the response, Argh. You're definitely a better investor than most of us in the medical field. So it sounds like for someone like me (who's still reading Personal finance for dummies. ) Uheaa would be better, si?

Dave

here's the thing: I may have read more than many med students about investing (took a year off before school, worked, etc.), but what I wound up investing in was so simple that I feel like a lot of people our age regardless of experience should at least consider doing it. I'm really down on money market funds and CDs as ways to gather retirement income; those are things you use to protect your retirement income, as in what you transfer stock money to when you're getting close to retirement.

depending on whether you think this company or that company's stated benefits are believeable, the answer on who to consolidate with changes. I personally chose to go with AES. I'm not afraid of them going away (they're like 4th largest in loan holdings). I know there's a question by several (or many) of whether their benefits are for real. The fact remains that no company you consolidate with will have their benefits laid out in the promisory note, which is all that you sign in the application process. There's the letter from AES which I felt was binding, that all loans originated via GL would have the rate reductions and the perkins loan perk, which is more than you would see in writing from other loan companies.

Anybody remember that it took actual investigation and pressing of UHEAA to find out that they don't re-amortize with rate reductions? I have yet to come across anybody besides the gov't and AES that will allow their monthly payments to reflect the interest rate instead of reducing the number of payments. Although I haven't looked at the whole spectrum of lenders, we collectively haven't heard about anything on this board either.

 

[jkl]

What does everyone think of the AMSA loan consolidation program? i called them, and they seem legit/helpful, etc. basically, the .25 reduction for direct deposit, and 1% reduction after 36 payments or .5% immediate reduction. they also guarantee that they can't make any changes/cancellations etc to your borrower benefits.

When I talked to them, they seemed to imply that the graduate leverage people were making empty promises and that I should be wary of what they offered (and that some of their promises are illegal??!).

what do you all think?

 

[argh]

My feelings about AMSA's "member benefits" aside, I thought what I saw on the surface was ok, but not spectacular. I'd be interested to know what they thought was hollow or even illegal about GL's offer, though I suspect whoever you talked to was more likely playing a game of salesmanship. The letter I have says they've consolidated nearly 40 MILLION dollars in loans. If average med student debt is 100k, that works out to nearly 400 students. not much of a track record.

Even though I did go with GL, I'm still watching their actions to try and be sure I don't get screwed. Since GL's rep is made and can be destroyed in a forum like this, you'd hope they wouldn't risk doing something sketchy. Now that I've gone through the process and have stepped back a little, sub-3% interest rate no matter how you slice it is ridiculously favorable, and we're all trying to squeeze that last little ounce of benefit we can.

 

[jkl]

My feelings about AMSA's "member benefits" aside, I thought what I saw on the surface was ok, but not spectacular. I'd be interested to know what they thought was hollow or even illegal about GL's offer, though I suspect whoever you talked to was more likely playing a game of salesmanship. The letter I have says they've consolidated nearly 40 MILLION dollars in loans. If average med student debt is 100k, that works out to nearly 400 students. not much of a track record.

Even though I did go with GL, I'm still watching their actions to try and be sure I don't get screwed. Since GL's rep is made and can be destroyed in a forum like this, you'd hope they wouldn't risk doing something sketchy. Now that I've gone through the process and have stepped back a little, sub-3% interest rate no matter how you slice it is ridiculously favorable, and we're all trying to squeeze that last little ounce of benefit we can.

you have a good point. no matter who i end up going with, i just dont want to get screwed in the end. the AMSA person i spoke with said something about how the perkins loan rate reduction that GL offers is illegal and they can't do that according to the federal govt. and that although GL says they can't sell your loans etc, there is fine print somewhere that says they can make any changes to your contract if necessary. honestly, the AMSA person said alot of things to me that I didn't quite understand (i'm pretty dumb when it comes to finances, etc). i will call again and see what they say...

i was going to go with GL, but the AMSA guy somehow scared me into not going with them. maybe i should look into sallie mae also, although someone told me it may be harder to defer if i go w/sallie mae. anyone have insight into this?

 

[kas23]

you have a good point. no matter who i end up going with, i just dont want to get screwed in the end. the AMSA person i spoke with said something about how the perkins loan rate reduction that GL offers is illegal and they can't do that according to the federal govt. and that although GL says they can't sell your loans etc, there is fine print somewhere that says they can make any changes to your contract if necessary. honestly, the AMSA person said alot of things to me that I didn't quite understand (i'm pretty dumb when it comes to finances, etc). i will call again and see what they say...

i was going to go with GL, but the AMSA guy somehow scared me into not going with them. maybe i should look into sallie mae also, although someone told me it may be harder to defer if i go w/sallie mae. anyone have insight into this?

I e-mailed two people from GL last Thursday asking them how they could reduce my Perkins rate to a Stafford rate in the determination of my final rate when this rate is determined by a federally-regulated equation. I have yet to hear back from either of them. But who knows! Maybe I'm wrong, maybe everyone else's wrong, maybe there's a fine print loophole.

One thing I do know for sure though; I don't trust [insert loan consolidation company here] more than I trust any used car salesman. Haven't you guys noticed all the crap we get in the mail now? It's like "long-lost" relatives calling a recent lotto winner. It's like they smell blood or something - a new doctor! let's get their money.

 

[Mirror Form]

I e-mailed two people from GL last Thursday asking them how they could reduce my Perkins rate to a Stafford rate in the determination of my final rate when this rate is determined by a federally-regulated equation. I have yet to hear back from either of them. But who knows! Maybe I'm wrong, maybe everyone else's wrong, maybe there's a fine print loophole.

Hmm, I don't know 100% how these loans work, but I don't see what is so illegal about it. The way I understand it is, that when we consolidate our new lender pays off all of our loans. So, GL's lender (i.e. AES) would pay off the perkin's loan for us (our school is the lender, so they'd pay your school the money and the perkins loan would effectively be over), and then we'd owe them the money instead. So, they can then charge us a different interest rate instead. Am I missing something? Yes there are regulations that apply, but I don't see how they stop the company from charging us less interest. If that was the case, then no company could legally offer any borrower benefits whatsoever!

BTW, definitely don't trust something that some sales rep tells you on the phone, those people are ******. GL at least gave us something in writing. Maybe I am missing some fine print in the contract somewhere, but it's a heck of a lot more credible that a freaking sales rep.

 

[Jeff698]

i was going to go with GL, but the AMSA guy somehow scared me into not going with them.

Well, then he achieved his objective. That's his job...scare you away from his competitors. I have a tendency to immediately distrust someone who feels the need to trash competitors to sell his product.

Take care,
Jeff

 

[argh]

ok, though I hesitated to rip on AMSA member benefits before, I feel like I have to say something about them because it's pertinent to the argument. I have yet to see anything AMSA advertises to be truly helpful. Their "discount rates" for hotel rooms, airlines, and rental cars were far from ideal. Their credit card is hardly favorable. Really, everything they've sent to me has been clearly a mildly discounted rate and can be easily beat by a little shopping around. This is one of the reasons I kinda didn't bother investigating their loan consolidation stuff before. They obviously contracted out to some lender who was not identified in the letter I got, and AMSA isn't exerting its influence on the lender.

as far as originating consolidation loans, the maximum interest rate that can be charged is whatever the weighted average is (which is why everyone, including people who do GL, should be careful before thinking about consolidating Perkins loans). However, because the cost of being a lender is increased greatly by defaulted loans, behaviors that promote on-time payment are rewarded. This is why every company who promises to not sell your loan will add the qualification that it applies only when your loan is not in default.

I wonder if the interest subsidy on subsidized stafford loans that gets paid when they've been consolidated reflects the current stafford rate or the rate it was when it was consolidated. In other words, when the rate changes in July, will consolidation lenders get subsidized at 4.5% (or whatever it is at that time) or at 2.77%? This could account for the willingness of lenders to extend favorable rewards to students.

 

[jkl]

hmmm. i guess i was being a little naiive and should have known better than to take everything the AMSA person said as truth. thanks everyone for your input! that was really helpful!!

 

[blocks]

This has really been a tremendous help for those of us who are just getting started in our research and comparisons.

Anyone who investigated Sallie Mae/Med Loans want to run the numbers and plus/minuses for comparison?

I am most interested in the scenario of AES being bought/going under. Sallie Mae appears on the surface at least to have the advantage here. I understand AES puts in writing that they will not SELL your loans, but what about this scenario? Are those of you who decided on AES assured that your interest rate is locked in airtight?

 

[bababuey]

I have heard that although many of these companies offer you great APR's the percentage of people who actually end up getting these low APR's is VERY low. I have heard that only about 7-10% of people will actually get these low rates due to something causing them to be disqualified. Anyone have any experiences or know something that could comment on this?

 

[bababuey]

Anyone consolidate with T.H.E.?????

 

[kas23]

I have heard that although many of these companies offer you great APR's the percentage of people who actually end up getting these low APR's is VERY low. I have heard that only about 7-10% of people will actually get these low rates due to something causing them to be disqualified. Anyone have any experiences or know something that could comment on this?

For most, the small print says that all payments have to be on time, or you are disqualified for the rate reductions. This could be a problem with us, since we are likely to move or change banks. For a total of 360 payments, we really have to be on top of our game to send in all payments on time.

 

[jkl]

So after much deliberation over my $158K debt, I ended up going with GL/AES. For those who also went w/GL, I was just curious as to what repayment option you picked? I know we can always change them later, but I'm just curious...

I picked the Equal Payment one, but think maybe I should have picked the graduated payment one... either way, i plan on going into deferment for hopefully 3 yrs, which is when i'll be done with residency.

thoughts?

 

[bikerboy]

This has been a great thread, very pertinent. Here is what I got from two back to back phone calls to first Sallie Mae, then GL.

Sallie Mae:
Consolidation rate of 2.875%. Reduced by 0.25% with auto-payment. After 36 consecutive ontime payments, 1% reduction. details: Sallie Mae will re-amortize the loan after the 0.25% reduction, which in my case would save me about $20/month in payment. The 1% reduction is not re-amortized, instead the extra money is applied to prinicipal resulting in a faster payoff. For some medical schools they offer a Med-loan consolidation program, which has a 48 month 1% reduction, but the addition of a one-time 1% reduction of the principal of the loan at the same time.

GL-AES.
Consolidation rate of 2.875%. Reduced by 0.25% with auto-payment. After 20 months of ontime payments, a 1% reduction. The entire loan is then re-amortized at the 21 month mark at the new interest rate of 1.6%.

I'll leave it to the excel gurus to work the math, but I suspect the lower monthly payment with GL-AES with the difference being put into investments would be advantagous vs Sallie Mae.

Some other tidbits I got:

If you are married with a working spouse, only your income (not the combined income if you file jointly) is used to determine eligibility for deferment.

Do not consolidate your private loans with the federal loans, as then the entire amount is now a private loan and subject to market shenanigans.

If you have achieved the on-time payment interest reduction, if ever during the life of the loan you are late on a payment, you lose the interest bonus for good, it cannot be recaptured.

 

[kas23]

Sallie Mae:
Consolidation rate of 2.875%. Reduced by 0.25% with auto-payment. After 36 consecutive ontime payments, 1% reduction. details: Sallie Mae will re-amortize the loan after the 0.25% reduction, which in my case would save me about $20/month in payment. The 1% reduction is not re-amortized, instead the extra money is applied to prinicipal resulting in a faster payoff. For some medical schools they offer a Med-loan consolidation program, which has a 48 month 1% reduction, but the addition of a one-time 1% reduction of the principal of the loan at the same time.

Great information! I didn't know that Sallie Mae would re-amortize your montly payments after the 0.25% reduction. Who did you exactly get this information from? Did you call a particular phone number?

 

[bobbyseal]

Anyone consolidate with T.H.E.?????

Booey:

I'm consolidating with total higher education. I won't qualify for economic hardship while as a resident and so that's going to be about 3 1/2 years of forbearance. They don't capitalize interest during forbearance periods like sallie mae does every quarter. Therefore, it stays as a little pool and you can pay it off prior to capitalization if you can or let it all capitalize once.

 

[bikerboy]

Great information! I didn't know that Sallie Mae would re-amortize your montly payments after the 0.25% reduction. Who did you exactly get this information from? Did you call a particular phone number?

Kas23, I called the toll free number off Salliemae.com. 888/2-SALLIE (272-5543). I didnt write down the names of the 2 or 3 different people I spoke to in the different stations I was transferred to.

 

[kas23]

Kas23, I called the toll free number off Salliemae.com. 888/2-SALLIE (272-5543). I didnt write down the names of the 2 or 3 different people I spoke to in the different stations I was transferred to.

Cool, thanks.

 

[double elle]

Booey:

I'm consolidating with total higher education. I won't qualify for economic hardship while as a resident and so that's going to be about 3 1/2 years of forbearance. They don't capitalize interest during forbearance periods like sallie mae does every quarter. Therefore, it stays as a little pool and you can pay it off prior to capitalization if you can or let it all capitalize once.

Would you mind if I ask why you don't qualify for deferrment? I am incredibly worried that I won't qualify. I talked to the GL people yesterday and they assured me that I would - based on my 2004 tax return, and then using only my paystubs for the second 2 years. My father passed away and I receive his pension - which adds about 30K to our income. They said I could present EITHER paystubs OR the tax returns - but both aren't necessary. So, for the first year = tax return that shows only my father's money...then the next 2 years = use only the paystubs that reflect my salary and leave my dad's money out of it. Based on my debt/salary ratio (or however they do it) she said I will qualify for deferrment even if I go up to 45-48K/year.

I am just wondering if you have a similar situation (yeah, too much income - what a problem to have!...), or if you have another situation that may apply to me that I need to think about. My residency will be 5 years, plus fellowship if I want to go that route - and we are thinking of buying a new home. However, I don't want a loan payment AND a new house payment. I think I mentioned this in my post from a couple of days ago....Anyway, I am just trying to think of every possible scenerio that could cause me to be turned down for deferrment. thanks.

 

[bobbyseal]

Would you mind if I ask why you don't qualify for deferrment? I am incredibly worried that I won't qualify. I talked to the GL people yesterday and they assured me that I would - based on my 2004 tax return, and then using only my paystubs for the second 2 years. My father passed away and I receive his pension - which adds about 30K to our income. They said I could present EITHER paystubs OR the tax returns - but both aren't necessary. So, for the first year = tax return that shows only my father's money...then the next 2 years = use only the paystubs that reflect my salary and leave my dad's money out of it. Based on my debt/salary ratio (or however they do it) she said I will qualify for deferrment even if I go up to 45-48K/year.

I am just wondering if you have a similar situation (yeah, too much income - what a problem to have!...), or if you have another situation that may apply to me that I need to think about. My residency will be 5 years, plus fellowship if I want to go that route - and we are thinking of buying a new home. However, I don't want a loan payment AND a new house payment. I think I mentioned this in my post from a couple of days ago....Anyway, I am just trying to think of every possible scenerio that could cause me to be turned down for deferrment. thanks.

It basically comes down to the calculators. They way they're doing at THE, I'm going to eat up my 6 month grace period because they don't give you that once you enter repayment. Then, I'm applying for economic hardship after the six months using my current pay stubs. So, I'll qualify for economic hardship for 1 1/2 years. After that I have to use my pay stubs from residency. Since I didn't take out too much in the way of loans, I won't qualify for economic hardship based on the criteria. Frankly, I don't really see it as making too much money. More like not being in as much debt as others.

 

[kas23]

It basically comes down to the calculators. They way they're doing at THE, I'm going to eat up my 6 month grace period because they don't give you that once you enter repayment. Then, I'm applying for economic hardship after the six months using my current pay stubs. So, I'll qualify for economic hardship for 1 1/2 years. After that I have to use my pay stubs from residency. Since I didn't take out too much in the way of loans, I won't qualify for economic hardship based on the criteria. Frankly, I don't really see it as making too much money. More like not being in as much debt as others.

Bobbyseal, I am confused about how you are going to qualify for deferement. How are you going to qualify for economic hardship if you did not take out "too much in the way of loans?" My understanding is that your monthly loan payment (based on 10 year payback period) has to be greater than 20% of your pre-tax monthly income. Do you have any secrets up your sleave about qualifying for deferement?

And what are your "current pay stubs?" Did you go out and get a job at Wal-Mart or something before residency?