interest rates and stafford loans

[Yogi Bear]

how do stafford loans work for med students? i.e. are today's low interest rates fixed for us when we graduate or is it variable for the entire loan repayment? how about undergrad stafford loans?

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[mpp]

Most of this information is available in the Financial Aid forum if you go throught the Links thread.

All Stafford loans are variable rate loans. The rate is adjusted once per year. You can fix the rate of the loan when you are finished with school by consolidating all the loans together. Interest is not capitalized while in school, but is capitalized annually once in repayment.

 

[Yogi Bear]

how many times are u allowed to consolidate? i.e. coiuld u consolidate once for undergrad to get the low rates and again for medschool loans?

 

[pocwana]

people are consolidating loans right now to lock in the low interest with the plan to defer during school, but doesn't consolidating nullify the subsidized aspect of a subsidized stafford loan? if i don't consolidate my subsidized loans will the interest continue to be subsidized in med school? so then if i do consolidate them, will they now accrue interest since they will no longer be identified as a subsidized loan? sorry, if the wording of my ? is funky, let me know and i'll try to clarify. thanks

edited:
and to answer my own question after looking at sallie mae's FAQs (http://www.salliemae.com/school/faqs/consolidation_faq.html):

Can I consolidate my subsidized loans with my unsubsidized loans? Hide answer.

Yes. A Consolidation loan may include both subsidized and unsubsidized Stafford loans or a mix of subsidized Stafford loans and other federal education loans. Borrowers may retain interest subsidy benefits for subsidized Stafford loans that are mixed with unsubsidized Stafford loans or other federal education loans. This means the federal government will pay the interest that accrues on the subsidized Stafford portion of a Consolidation loan during authorized periods of deferment. You may obtain a deferment, for example, if you return to school on at least a half-time basis, become unemployed, or suffer other economic hardship. However, under current rules, borrowers will not retain the interest subsidy for any Federal Perkins loans if these loans are included in a new Consolidation loan.

Tip: If you want to preserve the subsidy benefits of existing Federal Perkins loans, you should not consolidate these loans in a new Consolidation loan.

 

[birdie]

What are the conditions for being able to qualify for economic hardship?

 

[pocwana]

Originally posted by birdie
What are the conditions for being able to qualify for economic hardship?

Economic Hardship: Covers a borrower who earns less than minimum wage or exceeds a federally defined debt-to-income ratio. Also covers borrowers who are receiving public assistance or who are serving in the Peace Corps.

taken from https://www.manageyourloans.com/MYL?Select=menu_glossary&StateID=43#Deferment


and, just to be complete, other reasons for deferment:

Deferment: A period of time during repayment in which you, upon meeting certain conditions, are not required to make regular monthly payments.

Available deferments programs are:

ACTION Program:
Covers full-time paid volunteer service with an organization participating in a program authorized under Title I of the Domestic Volunteer Act of 1973.
Economic Hardship:
Covers a borrower who earns less than minimum wage or exceeds a federally defined debt-to-income ratio. Also covers borrowers who are receiving public assistance or who are serving in the Peace Corps.
Graduate Fellowship:
Covers study under an eligible graduate fellowship program.
In-School (Student):
Covers both full-time and half-time study at eligible schools.
Internship / Residency:
Covers service in an internship program that is required to receive professional recognition needed to begin professional practice or service. Also covers service in a medical internship or residency training program that leads to a degree or certificate awarded by an institution of higher education, hospital, or a health care facility that offers postgraduate training.
Military:
Covers active duty status in the U.S. Armed Forces.
National Oceanic and Atmospheric Corps:
Covers active duty service in the National Oceanic and Atmospheric Administration Corps.
Parental Leave:
Covers a borrower who is pregnant or caring for their newborn or newly adopted child. Borrowers cannot be working full-time and must have been enrolled at least half-time in school six months prior to beginning the deferment.
Peace Corps:
Covers volunteer service under the Peace Corps Act.
Primary Care Physician:
Covers practicing primary care physicians that completed an internship in one of the following specialties: osteopathic general practice, family practice, general internal medicine, preventive medicine, general pediatrics.
Public Health Service:
Covers service as a full-time officer in the Commissioned Corps of Public Health of the U.S. Public Health Service.
Rehabilitation Training Program:
Covers a qualified individual?s participation in a rehabilitation training program.
Summer Bridge Extension:
Covers summer months for students who are deferred through the end of the spring academic period and are planning to reenroll for the fall academic period.
Tax-Exempt Organization Volunteer:
Covers full-time paid volunteer service with a tax-exempt organization that the U.S. Department of Education has determined to be comparable to service as a Peace Corps or ACTION volunteer.
Teacher Shortage Area (Targeted Teacher):
Covers full-time teaching in a public or nonprofit private elementary or secondary school located in a teacher shortage area as defined by the U.S. Department of Education.
Temporary Total Disability:
Covers a period during which a borrower is temporarily totally disabled or unable to secure employment because they are caring for a dependent or spouse who is temporarily totally disabled.
Unemployment:
Covers individuals who are seeking, but unable to secure, employment in the United States. The borrower can be receiving unemployment benefits.
Working Mother:
Covers mothers of pre-school age children when the mothers are entering or reentering the workforce.

and Forbearance qualifications:


Forbearance: A temporary cessation or reduction of payments due to financial difficulty. Forbearance is usually granted for periods up to twelve months at a time. You are responsible for all accrued interest during a forbearance period. Unpaid interest may be capitalized quarterly or at the end of the forbearance.

Available forbearances for FFELP loans include:

Administrative:
Granted to the borrower for payments of principal and interest that are overdue or that would be due in certain circumstances. An example of an administrative forbearance is a forbearance that is processed prior to a deferment when an account is past due. Also, a mandatory forbearance may be processed as an Administrative forbearance.

Discretionary (voluntary):
Assists a borrower in fulfilling the repayment obligations of the loan and to help prevent default. Situations in which the forbearance may be granted include, but are not limited to: personal financial problems, poor health, enrollment in a school or volunteer organization, or a request for change in due date or payment amount.

Mandatory: Forbearance that the lender is required to grant for borrowers
Who are in an internship/residency program but are not eligible for an internship/residency deferment
Whose student loan debt exceeds 20% of their monthly income
Who demonstrate eligibility through the National and Community Service Trust Act of 1993 (AmeriCorps)
Who are eligible for Loan Forgiveness Demonstration Program for Child Care Providers
Who are participating in a Student Loan Repayment Program administered by the U.S. Department of Defense


The borrower must request the forbearance and provide documentation of eligibility. These forbearance types may be reflected as an Administrative Forbearance on your account.