My M1 year I consolidated at 4.5% (or whatever it was) and now that they are set at 6.8% wouldn't it be better to NOT consolidate them together (and instead try and pay off the 6.8% loans first)?... Unless, there is some huge drop in rates that can be gained by consolidating, but I thought we wouldn't be able to get anything lower than 6.8% (correct me if I'm wrong)?
If you consolidate it can be lower...
The loans before 2006 were variable and adjust every year, (3.2% I believe) and they are still in the 3's this year. Loans after 2006 are 6.8% fixed. So if you consolidated, they have a formula where they weigh each loan with its respective percent and give you a fixed rate. So if you took out a lot in undergrad, the fixed rate would probably be lower 5's (which is still the same in the long run). If most of your debts are in med school it will be near 6%. If you consolidate you can take 20 or 30 years repayment instead of the government standard of 10.
There are no loopholes around around 6.8%. Either you keep them as is or consolidate and the average weighted rate is included in the consolidation anyways even with a lower total rate.
If your loans 200k+, forget paying them back in residency. You won't be able to afford the +2600/month payment. You can do Mandatory Forbearance where you don't pay a cent in residency but they ALL accumulate interest and added to the principal (even direct subsidized).
This is how good people used to have it:
1) Interest rate of 2%
2) Significant lower Medical School tuition and cost of living than today's standards.
3) You could deffer your loans during residency (no interest accumulates on your subsidized loans).
We on the other hand got the short end of the stick with loans, on top of the fact we will have lower salaries. Medicine sucks.
Good News though... if we graduated 5 years ago we probably would of got sucked into the housing bubble buying a 800k house that's currently worth 200k. You win some, you lose some.