In-School consolidation with Direct loans

[rhinosp_33]

quick quesiton...

i think i heard/read somewhere that you can do in-school consolidation if you have federal direct loans? is that true?

i'm asking because my sister is still in 2nd yr of medschool, she has a set of undergrad loans as well as the MSI and MSII loans. shes not plannin to take anytime off, given that... can she consolidate her undergrad and MSI loans through the federal government to lock in the 2.77% interest rate? she does have direct loans. the objective would be to pick up this lower rate with anticipation that by the time she graduates in 2007, the rate will be much higher.

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[GeneGoddess]

NO. Do not consolidate your loans until after you graduate. You can only consolidate once, and thus new loans taken out during the last 2 years of medical school cannot be added to the consolidation. It will end up costing you much more money and heartache in the long run.

That's quite wrong. If you consolidate during school, you must use Direct Loans (the gov't). But you can consolidate multiple times as long as you have "new" loans to add. My husband consolidated some loans after getting his MS (post-grad), took out more loans for his PhD and consolidated them with the others while in school (with Direct Loans). He also took out an additional $500 so that he can consolidate with a private company after graduation to take advantage of some perks that the gov't doesn't offer.

 

[manta]

I thought that you can consolidate a particular loan once, but you can consolidate different loans later. For example, I have undergrad, graduate, and one year of med school loans. I thought I could consolidate all of these into one loan (we'll call it loan A), and then consolidate my loans from MSII-IV into another loan later - loan B. So I'll have to 2 loans to pay off.

Am I completely off?

 

[GeneGoddess]

I thought that you can consolidate a particular loan once, but you can consolidate different loans later. For example, I have undergrad, graduate, and one year of med school loans. I thought I could consolidate all of these into one loan (we'll call it loan A), and then consolidate my loans from MSII-IV into another loan later - loan B. So I'll have to 2 loans to pay off.

Am I completely off?

You can do that and have two loans (A and B), or consolidate all the loans that make up B into A to make C, or consolidate A and B and later consolidate them into D (similar to C). Keep in mind that when Stafford loans are consolidated, the interest rate is a WEIGHTED average. So if you consolidated your undergrad loans at 5% and want to consolidate your med school loans now at 3%, the AVERAGE would be 4% (assuming that both loans were for the same amount).

 

[GeneGoddess]

This may be true, but my information comes from loan officers at several medical schools. Things may work differently for non-medical students. There are certain things that med students must go through so that repayment does not have to occur until residency is complete.

I am a medical student, and my information comes from both my school, the NSLDS, Direct Loans, and several private companies. I also read the fine print (many private companies have no idea that you can consolidate while in school).

Anyone can apply for to defer loans while in residency (whether or not they are consolidated). You can no longer automatically defer during residency unless you have loans that are from BEFORE 1993. But you can ask to defer due to "economic hardship". But interest WILL acrue. Some companies may have stricter rules than others. HOWEVER, I'd much rather lock in my interest rate at the inschool/graceperiod level than at the higher rate during the "repayment" period.

Be aware, though, that Perkins Loans have a fixed 5% interest rate, a 9mo grace period, and may be forgiven in some circumstances. You may not want to consolidate them (if you have them). I don't plan to. I'm only going to consolidate my Staffords and leave my Perkins' independent.

 

[rhinosp_33]

OSUdoc08 .... i dont often call out other people, but i've seen repeated times in the past when you have given out inaccurate information regarding financial aid. my interpretation is that you state your 'opinions' on the subject rather then offer fact.

anyways,

GeneGoddess... your right, i did confirm the inschool consolidation with direct loans today by phone. not only can you consolidate now and lock in the 2.77% rate, you can still be inschool deferement and your subsy interest will retain subsy. and yes, you can re-consolidate again with private or federal companies if you take out more loans.

GeneGoddess...... a few things:

1.) you said interest will accure during "economic hardship" --- by this, you must mean that unsubsy interest will accure during economic hardship deferement and subsy interest will NOT. alternatively, you mean that all interest will accure during economic hardship Forebearnce. Right?

2.) on a different post, you had talked about a company with perks of 1.25% auto debit and 1% after 48 consecutive payment deduction. Was that from UHEAA? if not, who? Did you decide to go with them?

 

[GeneGoddess]

It is UHEAA (I keep forgetting to post there). I think I'll go with them unless I hear about someone better. My husband is going to go with them, too.

Once you graduate (whether or not you consolidate), you can apply for a forbearance. BUT, both sub and unsub loans will acrue interest. It really sucks... It's different than an "in school deferment", where only the unsub grows. And the rules are fairly strict. Most place have them on their sites (look up forbearance).