~~~Obnoxious Debt level~~~

[Pureride]

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I have an enormous amount of debt from undergrad, masters program and medical school. I am an MSIV.
I have a few questions...
Can I consolidate my stafford loans WITH my private loans?
If I claim economic hardship and decide to take the forebearance option throughout the length of my residency (6 years-URO) can I make randoms payments here and there? Or am I forbidden to make payments?

When is the best time to consolidate...during grace perios or during school?
Can anyone recommend some good consolidation companies/banks?

I know this is a tall orded but answers to any of the above are greatly appreciated!

Thanks a million!
-Jordan

 

[LoanGrl]

Hi Jordan,
You've asked some very good questions. Maybe someday lenders will move into consolidating private and Stafford loans, but for now, you can only consolidate your Stafford loans. Federal regulations state that you must consolidate your loans with the lender who carries the bulk of your current loans, unless that lender does not offer consolidation loans. When you consolidate, make sure that you will not lose your 6-month grace period; you can either consolidate toward the END of your grace period, or you can consolidate during and just arrange to NOT receive your funds until the end of your grace. Don't wait until the last day of your grace to submit your deferment papers or do anything, however, otherwise you will be past due.
You can defer your loans and still pay the interest/make payments during that time; be sure to check with your tax professional, but we understand those payments are still tax deductible, even though you aren't REQUIRED to make them.
If there's any way that you can manage to make your interest payments during your residency, you are wise to do so. It will save you a ton of cash in the long run!
Also, whatever lender you consolidate with, MAKE SURE that your consolidation will not throw you into repayment.
Don't be afraid to ask questions about what you don't understand: it's YOUR money after all, and YOU are the client!
I hope this helps. 🙂

 

[Pureride]

Dear LoanGirl:

Thanks a million for your response!
I dont quite understand what you mean by

"...Federal regulations state that you must consolidate your loans with the lender who carries the bulk of your current loans, unless that lender does not offer consolidation loans..."

My loans consist of X amount of Starfford loans and 2X of private loans. Therefore, the bulk of my loans are my private loans (TERI). Does that mean that I can only consolidate all of my TERI loans?

Also, I am an MSIV, can I consolidate now and still be granted the 6 month grace period?

Thanks
-Jordan

 

[LoanGrl]

Hi Jordan,
I'm sorry, I didn't mean to confuse you. You can't consolidate your private loans. You can only consolidate your Federal loans. There are various lenders who provide Federal loans; do you know who your Federal loans are with? If not, either look at your loan statements or ask your FAO; whoever owns your FEDERAL loans is who the regs say you need to consolidate with. For instance, if you received most of your Federal loans from Sallie Mae (or Access, or T.H.E., or Wells Fargo, or whomever), then the regs say you must consolidate with them unless they don't offer a consolidation plan. In other words, you will be paying on your private loans separately from your FEDERAL loans. I hope that makes sense. Good luck to you!

 

[Pureride]

Dear Loangirl:

Thanks.....that makes much more sense now!

All of my federal (stafford loans) are being serviced by Sallie Mae however, they are comprised of man different lenders.

Is the servicer (Sallie Mae) going to be doing the consolidation or one of the lending comapnies?

If its one of the lending companies than from what you have previously written, it would be the bank that has the bulk of my loans...correct?

Thanks again!
-Jordan

 

[LoanGrl]

Hey Jordan,
If your loans are being serviced by Sallie Mae, then you can consolidate with Sallie Mae. I am guessing, based on what you've told me, that you have your loans with a lender who's a partner with SAllie Mae like we are. (I work for NOWLoans). We don't offer a consolidation loan; we refer all those to Sallie Mae. You can check out your lenders web sites and see what they offer in consolidation loans; if they don't offer them, then you can go to Sallie Mae's website and check out theirs. As I said before, don't be afraid to ask questions, especially if there's something you don't understand.

 

[-=[BJIC]=-]

Yes, this subject sounds interesting, indeed.

 

[lucas]

I am in the same boat as Pureride. My question for youy loangirl: If I consolidate my Federal loan during residency then claim defement or forbearence, how long can I go without paying anything or just interest? The full five years of surgical residency? Longer? I appreciate all your help! Pureride, Kudos for opeing this topic up for discussion!

 

[latte01]

Hey Lucas,

I just saw your post and wanted to reply to. I recommend you look at the responses I put in the HPSP and MILITARY scholarship discussion headings. In NO way am I a military recruiter. In fact, I was very upset for taking the HPSP scholarship a year ago. But now, I am EXTREMELY happy that I took it. Again, feel free to read my responses in the folders named above.

Latteo1

 

[LoanGrl]

You can defer your Federal loans (consolidated or not) for up to three years; remember though that it's not automatic, you do have to fill out paperwork and "apply" for it. Whether or not you choose to make interest payments is up to you. Keep in mind that the interest will continue to accrue; it grows quicker than you think, even at low rates. If you CAN make interest payments, you'll be farther ahead in the long run. Make sure that you get your deferment forms filed on time so that you avoid having your loans capitalized; otherwise, you'll have interest accruing on interest! At the end of three years, you'll have to start making payments, even though you are still in your residency.
I agree with latte's advice, check into HPSP and other ways you can help with financing school. Good luck!
🙂

 

[lucas]

You rock Loangirl! I think I will end up just paying interest on my staffords and private loans while in deferment. After deferment, it appears Ill need forbearence for a year since Im in a five year residency. Key Bank/AFSA advertises that I can consolidate everything (Fed and private) together through them, but the interest rate is higher and not fixed. Plus they charge up front 8%for non Key Bank loans. Is this a bad deal? Thanks

Pureride, Up Periscope

 

[LoanGrl]

Thank you! I think the question here is how much are you willing to pay for the convenience of getting one bill?

It is very expensive for them to service that loan, hence the whopping fees. And there could be other "fine print" in that Prom note too that you might regret later.
For the record, I don't know anything about their product, but I would do my best to avoid adding any more fees and costs than I had to.

 

[latte01]

See below

 

[latte01]

Hey Lucas,

I actually had $17,000 debt because I got a masters
before entering medical school. Two months ago
I reconsolidated with ACS at 4.125% interest. The
rate will go down further to 3.9% once my application
for direct wire transfers from my checking account
gets approved.

I honestly think you can do better than 8%. The
fact that it's VARIABLE makes it worse because sooner
or later, the federal interest rates will go up to pay
off our accumulating debt from the Iraq war and
current recession. To put things in perspective, I
got my car loan at 5.25% FIXED. To make matters
worse, the average interest rate on borrowing $500,000
mortgage to buy a new house is 6%. So if you think
about it, you're paying more interest on loans at
8% than if you paid interest in buying a half-million
dollar house. Again, you do the math. Getting stuck
with a huge medical school loan is one of the worst
things people can get themselves into financially.

I recommend the following website, www.afsa.com,
for their application. Maybe they'll get you a better
interest rate. But remember, the more you delay in
reconsolidating your loans, the worse of a deal you'll
get. Get to it soon!

PS:Be sure to ask the bank that was offering you 8%
interest that if they'd be willing to lower it further and
fix it if you signed up for direct monthly automatic transfers
from your checking account. If not, then seriously
consider ACS because they'll do that for you.

 

[UI2003]

For even *more* info on the whole deferral vs. forbearance deal, check out the 'consolidation' thread under "General Residency Issues"!