Loans 101 question

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slakker

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Could anybody tell me when the grace periods starts for Federal Stafford loan? Is it after graduation from medical school or residency?

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Med School. But you can defer during residency.
 
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just know that you lose it if you consolidate, also.
 
You can retain your grace period when you consolidate, it is just held for funding until right before your grace period ends.
 
it is just held for funding until right before your grace period ends.

what? does that mean?

if it means that you have to start payments the month after you graduate instead of six months later, then yeah...sallie mae does that..
 
No, it means you can still have your grace period, and all lenders do it. On the federal application there is a box you can check to retain your grace period, it's the government approved application - all lenders use the same one. Your pay off information is collected but no funds are actually transferred until usually 1-2 weeks before your grace period ends. Then from there your first payment will be due in 30-60 days, depending on how quick your lender is.
 
Oh, I see what you're saying. I was thinking about my situation, where consolidating IN-school (FFELP) forced us to waive the grace (-this was in 2005 and 2006 when interest rates were 2-3%) I think the poster and you were both referring to consolidation at the end of medschool only (right?)

Anyways, here is something I found that spells it out a little more clearly: (or, clear as mud?)

"If your loans are in the grace period and you wish to consolidate, please remember that once you have consolidated and the loan is issued, you will lose the remainder of your grace period (even if it's a Direct Loan Consolidation) and payment on the loan will begin in 60 days. Therefore, it makes sense to begin the application at a later point in your grace period to take full advantage of the process unless rates increase significantly. (Many lenders will put the application into "hold" status until nearing the end of the grace period. This will enable you to take full advantage of the whole grace period and let you "hold" lower rates available prior to July 1, 2006.).

As if it were not confusing enough, there are two different federal student loan structures – Direct Loans are made by the federal government directly; FFELP loans are made by private lenders but are guaranteed by the federal government. Students with loans issued in the Direct Loan program are allowed to consolidate loans while they are still in school AND still obtain a 6-month grace period on their consolidation loan. FFELP loan holders are not allowed to consolidate loans while they are still in school.

However, many FFELP lenders will tell you that there are ways to consolidate your FFELP loans while still in school by asking your lender(s) to put your existing loans into repayment status. This does a couple of things: first, you would lose your grace period on the loans and would have to begin repaying right away. However, if you place the loans into repayment, they are now eligible for consolidation (but at the higher repayment rate – remember the .60% benefit described above – so you may lose the benefit of a lower rate)."

anyhoo, thanks for the info, feded!
 
You can't go into early repayment anymore while you are still in school. That was a little work-around tactic approved by the DOE to facilitate what used to be known as two step consolidations, which were a way to avoid the single lender rule. They repealed the single lender rule last year so two steps are no longer needed or allowed. Now the only way to go into repayment status is to graduate or drop below full time status. Really the only way not being able to consolidate while in school would be a bad thing is if there was a huge interest rate hike, but if they keep the rate fixed like it is now that won't matter either. It just makes my life more difficult ;)
 

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