Mistake to consolidate perkins loans?

[MrHide]

for those in internship consolidating loans, did i make a mistake in consolidating my perkins (5% interest) with the rest of my staffords (3% interest)?
it seems like the relatively high-interest perkins loans can be automatically deferred during the entirety of residency training without interest accruing. it's a big deal because perkins make a good chunk of my debt.

any opinions?

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[H2SO4]

I'm not planning on consolidating my Perkins with my Stafford. I'll consolidate all of my Staffords together to lock in a good rate, but the Perkins will be left out and not consolidated.

 

[tlew12778]

You should do the math and figure out how muc the perkins at 5% will affect your weighted average interest rate on your consolidation.

I initially consolidated in 2001 without my perkins loan. My fixed rate was something like 3.74. When I add in the perkins loan, it went to 3.75. I chose to pay the extra .01% on all my loans just for the convenience of paying one lender once a month.

 

[tinkerbelle]

I don't understand why you shouldn't consolidate your stafford and perkins loans. Why would you want to pay 5% instead of 3.something %? And can't you defer both loans when you go to med school/residency?

 

[mpp]

When you consolidate you take the weighted average of the interest rate on all your loans. You may inadvertently increase your Stafford loan rate to a higher rate and end up paying more interest than you should. You can do the math to figure out which is the better option (i.e., if the Stafford loan rates are higher than 5 percent than it is a no-brainer and you should definitely consolidate together).

Although you defer the loans during medical school (and you may qualify for deferment during residency although this depends on the total amount of loans you have), the usubsidized Stafford loans will accrue interest (although the Perkins loans will not). However, if they are consolidated together, then all the loans, including the Perkins, will accrue interest (regardless of whether they are in deferment or not).

 

[tinkerbelle]

Ah ok. Well that makes more sense. Thanks for the info mpp 🙂