Loan consolidation

[freedyx3]

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Hey guys,

Do you think I should consolidate my loans after I enter dental school? What are the positive and negatives of loan consolidation?

 

[dental2008]

I would do it now since you can only consolidate student loans once and it looks like interest rates are/will be on the rise. Unlike consolidating consumer debt, there are no negatives to consolidate student loans except a locked interest rate.

 

[freedyx3]

I would do it now since you can only consolidate student loans once and it looks like interest rates are/will be on the rise. Unlike consolidating consumer debt, there are no negatives to consolidate student loans except a locked interest rate.

But I heard if you consolidate you can't defer your loan after graduation.

 

[dental2008]

Very true

So now you have to look at some options:

A) can you make your payments while in school and lock in this low rate

or

B) Play the waiting game and lock it in at a higher rate in the future. It maybe 6% or 12%...only time will tell. Or on the pessemistic side, if there is another huge terror attack that might affect the economy, prime may drop to 3% in the future

If I was in the situation: If I could afford the payment I would do it because it could potentially save THOUSANDS in interest over the life of the loan. Sacrifice a little now and get a lot more later

 

[freedyx3]

Do you guys know of any other negatives of loan consolidation?

 

[no2thdk999]

You can consolidate your loans now and lock in rediculously low rates. They are not likely to drop anymore. The rate gets set every July on Federal loans for the next year so you might want to do it now before they have a chance to go up.

You can consolidate more than once but you have to have another non-consolidated loan to add to your previously consolidated loan. I.E. if you consolidate your undergrad loans now, you can re-consolidate with your d-school loans upon graduation in 4 years if you wanted to lock in whatever the rate was then. The new rate for the consolidated loan is a weighted average of all the loans you have.

I know you can defer federal loans while you're in grad school. I would bet the same goes for a consolidated loan but I would check with Fin Aid to be sure. If not you could apply for an economic hardship deferment for up to 3 years if you don't work full time and make less than around $1500/mo.

JMHO
Rob

 

[freedyx3]

so if i consolidate right now with my undergrad loans and my first year dental school loans at the current rate, do i reconsolidate after each year of dental school? If so is it consolidated at the original rate or whatever the rate is at that time? IE can i consolidate now at the super low rate and keep that rate when if i consolidate in 3-4 years?

 

[no2thdk999]

No.

If you consolidate $50,000 now at say 4% and then you have another $50,000 in loans in 1 year and now the rate is 5% and you want to consolidate again.

You would end up with a $100,000 loan with a rate of 4.5%. It's a weighted average.

The only benefit to consolidating is you only have one check to write per month and you lock in the interest rate instead of it being variable up to I think 8.75%. If you think the interest rate is going up I'd consolidate to lock in the low rate.

JMHO
Rob

 

[drPheta]

I had no idea you could consolidate more than once. That's good to hear. What about public and private loans? Can both be consolidated? Are there any loans that cannot be consolidated?

 

[dental2008]

YOU CAN ONLY CONSOLIDATE A LOAN ONCE. ITS THE LAW!!!

ASDA is trying to change this. You cannot consolidate a loan you already consolidated. Also, more often than not, you cannot consolidate a loan until you are in payback period.

 

[datu]

YOU CAN ONLY CONSOLIDATE A LOAN ONCE. ITS THE LAW!!!

ASDA is trying to change this. You cannot consolidate a loan you already consolidated. Also, more often than not, you cannot consolidate a loan until you are in payback period.

I attempted to consolidate (refinance, whatever you want to call it) earlier this year in order to lock in the the low rate (although I have loan deferment, I'm paying it down monthly). According to Federal regulations, it's just as dental2008 said, you can't consolidate a loan until you're in the payback period, in other words, not as long as you're a full-time student.

The interest on the loan, as far as I recall, is not tax-deductible either.

They nickel-and-dime you (in this case, five hundred & thousand) you to death.

But as always, we try to find our way around these little obstacles. And where there's a will, there's a way.

 

[freedyx3]

Ok so that basically means that I can only consolidate once I grad from dental school in 4 years?

 

[datu]

Ok so that basically means that I can only consolidate once I grad from dental school in 4 years?

That's how I understand it, if I'm understanding things correctly, that is!

 

[no2thdk999]

YOU CAN ONLY CONSOLIDATE A LOAN ONCE. ITS THE LAW!!!

ASDA is trying to change this. You cannot consolidate a loan you already consolidated. Also, more often than not, you cannot consolidate a loan until you are in payback period.

This is true, unless you have an additional loan to consolidate. I consolidated 3 years ago all of my stafford loans. If I wanted to re-consolidate today I could because I have one loan from undergrad that is separate. It would not change the rate of the old consolidated loan to today's low rates. They are fixed at what they were when I consolidated. The only benefit for me would be to have one less check to write and possibly extend the payments if I wanted to.

Datu is probably right in that you have to be in the repayment period to consolidate, I'm not sure as this doesn't apply to me.

The interest on student loans is at least partially deductible as long as your AGI is less than 65K (single) or 130K (married joint).

Freedyx3 why don't you call your financial aid dept. I bet they have the correct answer.


JMHO
Rob

 

[Bcat]

you can consolidate before you are in repayment. you should definitely talk with your financial aid advisor rather than take everything here as true. i just consolidated all of my undergrad and this years tuition! i'm definitely not in repayment yet..