EvilNewbie

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I just learned that you pay an additional 1.5% if you consolidate through a private lender!! UHEAA will give you 1.25% back but you still pay .25% more!! However, Direct Loans will give you .25% if do you automatic withdrawal whereas UHEAA gives 1% back after 4 years (?). Meaning that you only get a .5% reduction for all that work and it may not even be worth it since private lenders don't let you defer during residency.... No wonder the private lenders are making millions off students shame on them when MOST of the students going through private lenders end up paying more in the long run.... anyone with different opinions? Leave it to corporate America to rob you even when you are poor!
 

rhinosp_33

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i'm confused ..

from what i know... direct (govt) consolidation only gives you the 0.25% for auto debit.

private consolidation give you the 0.25% ad standard... PLUS other perks such as 1% or more after a few years.

privates have the better perks, no?
 
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EvilNewbie

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You are right, they do have better perks BUT what you don't know is to transfer your loans to a private lender will cost you 1.5% of your TOTAL loan which pretty much gets rid of all the perks except a very small percent like .25% AND you CAN"T defer during residency. You end up paying the interest INSTEAD of the principal during your residency (meaning you don't dent the loan at all but paying for it when you shouldn't). And since interest rates are going up this July, you don't get much of a grace period either with a private lender. Whereas the government will give you the grace period if you consolidate BEFORE you graduate AND deferment during residency - overall it's a better package cause you actually pay LESS with the government then a private lender even with their perks. They are really sneaky, those private loan people.
 

rhinosp_33

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It costs 1.5% principal to "transfer" loans into a private lender??

I have never heard/read of this. I've looked into consolidation for a while now, and have not heard of any places requiring any sort of upfront fee or transfer fee.

Please link your information. Can anyone else verify this?
 
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EvilNewbie

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Okay you want the details, geez... you should talk to your medical school's financial aid counselor, they have all the in's and out's. The short of it is this... the government charges you a origination fee at the beginning because it is believed that you will stay with them so it is cheaper (most places charge even more) and because you leave, why make it cheap on you? They add onto it because you are taking your business elsewhere so it goes up by 1.5% as a "post" - origination fee payment to your principal. The financial aid counselor put it this way, the private lenders are corporations whose CEO makes 30 million a year by ripping students off... you pay for it in the long run and you don't even know it. Talk to your financial aid counselor is my BEST advice... they have been through this road before and have no financial incentives to steer you towards government versus private lenders. If you STILL wish to go to private lenders then I would recommend UHEAA (you'll still pay more... just letting you know). However here is a link where they talk about student consolidation... it's pretty good but they also failed to realize the disadvantages of switching...

Here is the link http://www.fatwallet.com/t/52/262119
 

GeneGoddess

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I just checked with UHEAA and the do NOT charge any "upfront" or "transfer" fees for consolidation. Some lenders charge origination fees, some don't (notably Northstar/T.H.E.). I do not know about UHEAA's origination fee status (it is listed on their website) as I never borrowed from them, and did not look into it. That's why it is always a good idea to shop around...
 

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Dear EvilNewbie,

unfortunately you are misinformed. Lenders who participate in (or are eligable for) the Federal Family Education Loan Program (FFELP) can consolidate your loans under identical terms AS REGULATED BY THE FEDERAL GOVERNMENT. In other words, the feds do not allow these lenders to charge you any application fees, origination fees, prepayment penalties. They can't even get a credit check. You should recognize that some private lenders are not eligable or do not participate in the FFELP and therefore will impose their own policy on the consolidation process. They can charge whatever they want. Basically, the easiest thing to do, is to consolidate with Sallie Mae through medloans and stop worying about it. You can lock in 2.77% rate (actually 2.85% with rounding) for 30 years. There is no other origination/transfer/hiden fees at all, period. I am sorry if I sound like a comercial, but I asked all of these questions yesturday. We had a consolidation seminar at our med school and I think I have a better picture of how it works today then several days ago. Anyway, you should talk to your FA officer again, and then check out Sallie Mae consolidation website or another lender who participates in the FFELP and then call them to confirm that they have no extra fees for yourself.

good luck
 
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EvilNewbie

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I didn't mean to imply the 1.5% is a fee... it is a REBATE that you got with the federal government with the Stafford loans and you LOSE that rebate when you transfer to a private lender. If you still have questions, PLEASE talk to your financial aid counselor. I am VERY serious about it, talk to them about losing that rebate... which means private lenders still suck. I just like to think of it as a fee because it adds to your principal loan... rebate, fees, semantics I guess...
 

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I am sorry evilnewbie, I don't understand what you mean. There were origination and insurance fees on the stafford loans that you got. These fees max out at 4%, and cannot be higher then that. I think usually they are much lower. So when you got a 10,000 Stafford loan, you were actually paid at least $9,600. You always receive less then what your loan amount is. There is no way to get the $400 back. This is just the way it is. If you consolidated with the feds you don't get your $400 back. You get the same 2.77% interest (+-) and also can get upto 0.25% interest reduction w/ online payments. The private companies THAT PARTICIPATE IN THE FFELP will offer a better deal by giving you something like 1% interest rate reduction after 36-48 consecutive on time payments. The feds don't.

I don't mean to be rude, but you have not provided any evidence for what you are claiming. I indeed have talked to my FAO and to the Sallie Mae people and to the Direct loans people. It is possible that I may be missing something. If you know something specific that you can direct me and the rest of the people reading this thread it would be great.

What you need to do is call the feds, the private companies and whoever else, and tell them to give you a total payoff amount and see what the difference is. The total payoff amount is an absolute marker of how much you will pay at the end of your 30 year term including interest and principle. This takes into account the capitalized interest and you payments...

EvilNewbie said:
I didn't mean to imply the 1.5% is a fee... it is a REBATE that you got with the federal government with the Stafford loans and you LOSE that rebate when you transfer to a private lender. If you still have questions, PLEASE talk to your financial aid counselor. I am VERY serious about it, talk to them about losing that rebate... which means private lenders still suck. I just like to think of it as a fee because it adds to your principal loan... rebate, fees, semantics I guess...
 
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EvilNewbie

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You want proof, then all YOU have to do is go to YOUR financial aid counselors and ASK. If your FA doesn't know or tell you about losing the 1.5% rebate then you better get advice elsewhere (that's just plain incompetence to me)... If you are too lazy then here is a school's financial aid seminar about consolidation... skip towards page 13 where they tell you about LOSING the 1.5% rebate (meaning you HAVE to pay it back)... You are right about the .25% rate reduction with automatic payments (the feds have that too). The 1% rate reduction is nice but still doesn't make up for lost of the 1.5% lost of rebate. UHEAA has a better deal in that it gives 1.25% and 1% 4 years later which is nice but banks have a complex arithmetic (to me that is... and I am sure you are getting the short end of the stick)... keep in mind that most of your monthly payments are in paying interests and fees first with your principal last (its advantagous for the banks this way).... One last thing... corporations are not benevolent people... you will never get a free ride... that's why they invented the the small print...

http://www.medschool.vcu.edu/finaid/documents/Consolidate2005.ppt
 
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EvilNewbie

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Also of note, I did call several private lenders cause I had the same ideas of all of you... I thought private lenders offered "better" perks, I called the same lenders 6-7 times a day for a week straight because I had new questions I just thought of. I came into my finanical aid counselors three times because I had new questions and wanted to ask them of their opinions. Let me break it down to this:

Points:
1) At most a private lender will give you a .25% reduction in interests with everything accounted for like the rebate (this is ONLY with UHEAA, whereas everywhere else you actually pay more instead of having a reduction).
2) No deferment... you are making diddly-squat as a resident, you probably be paying MOSTLY interests rates during that time and hitting the principals in small portion (this is what makes that .25% reduction look like a not so good tradeoff).
3) They can sell your loans without your approval (and according to one of my financial aid counselor who use to work at a private lender, they do so with 95% of their loans)... For you this could have some impact (mostly negative from what the FA told me).
4) Some lenders are able to switch you from fixed rate to variable rate without your approvals (you need to ask them if this was a possibility).
5) Can you guys just go ask your FA in a face-to-face manner... seriously you should be... and I am not talking about attending seminars... sit down and talk with them about the benefits and cons about private lenders versus government... and if you didn't spend at least a half hour in talking with them you didn't get enough information... you should be going over your loans and calculating what you owe and stuff like that as well...
 

GeneGoddess

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Interesting presentation. Always nice to see Direct Loan's sales pitch.
 
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EvilNewbie

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GeneGoddess said:
Interesting presentation. Always nice to see Direct Loan's sales pitch.

I am sorry, but do you have a private lender sales pitch somewhere that goes into losing the 1.5% rebate and how their deal is better than a direct loan consolidation cause I haven't seen one? Private lenders ONLY compared themselves with OTHER private lenders for a reason... The website which has the stuff is from a medical school that compared the advantages and disadvantages of going to a private lender and don't have any monetary or political ties with direct loans (but they do with private lenders)... Here's an idea... make it in the contract somewhere with a private lender that with a 30-year consolidation loan you will PAY LESS then going through consolidation with the government... THEY WILL NOT EVEN VERBALLY AGREE WITH THAT ASSESSMENT... they'll try to say something like you have done your homework... anything short of yes, you do pay less... try to make them say it... I assure you they won't, I tried it on the telephone but then I did tell them I was tape recording the whole thing.. hehe
 

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Dear EvilNewbie,

I think this is a great discussion. Where we are confusing each other is the difference in the way different medical schools borrow money. I am not sure what the advantages and disadvantages are of borrowing through direct loans vs private loans are. Notice I did not say consolidating. VCA has a direct loans program, meaning you guys borrow through the federal government. I don't know what the benefits of that is. When I started medical school we were not given an option to borrow through direct loans. All my loans are through medloans (affiliated with salliemae and aamc approved, for whatever that's worth). I do have direct loans through undergrad, interestingly from the same school. Its only 12K and if there is some kind of a rebate of 1.5% its only like $160 for me. Having the other 130K with medloans (salliemae) these $160. Don't matter too much for me.

I have went through the ppt that you posted. It is inacurate and misleading. First it is not 2.88% but 2.77% now. Then with private companies (I can't speak for all of them) at least with sallie mae who participates in this program all of your benefits such as in residency deferment and all of the other terms of the loans are retained.

I guess the teaching point in this discussion is that each person needs to find out if their med school loans are all direct loans or through a prviate company. I have never heard of a 1.5%rebate reduction perhaps it is b/c my school loans were not direct loans like I have said. For me to consolidate with direct loans, which I still can since I have my undergrad loans with direct loans (you are required to have at least one loan with them to consolidate all your loans with them) is not adventagious for several reasons. 1. If there is this 1.5% rebate thing its only on 12K for me. 2. I will have to deal w/bureaucracy of the fed gov for 30 years (have you ever tried their phone support...) 3. they don't offer the same perks that sallie mae does.

EvilNewbie said:
I am sorry, but do you have a private lender sales pitch somewhere that goes into losing the 1.5% rebate and how their deal is better than a direct loan consolidation cause I haven't seen one? Private lenders ONLY compared themselves with OTHER private lenders for a reason... The website which has the stuff is from a medical school that compared the advantages and disadvantages of going to a private lender and don't have any monetary or political ties with direct loans (but they do with private lenders)... Here's an idea... make it in the contract somewhere with a private lender that with a 30-year consolidation loan you will PAY LESS then going through consolidation with the government... THEY WILL NOT EVEN VERBALLY AGREE WITH THAT ASSESSMENT... they'll try to say something like you have done your homework... anything short of yes, you do pay less... try to make them say it... I assure you they won't, I tried it on the telephone but then I did tell them I was tape recording the whole thing.. hehe
 
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EvilNewbie

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PCN said:
Dear EvilNewbie,

I think this is a great discussion. Where we are confusing each other is the difference in the way different medical schools borrow money. I am not sure what the advantages and disadvantages are of borrowing through direct loans vs private loans are. Notice I did not say consolidating. VCA has a direct loans program, meaning you guys borrow through the federal government. I don't know what the benefits of that is. When I started medical school we were not given an option to borrow through direct loans. All my loans are through medloans (affiliated with salliemae and aamc approved, for whatever that's worth). I do have direct loans through undergrad, interestingly from the same school. Its only 12K and if there is some kind of a rebate of 1.5% its only like $160 for me. Having the other 130K with medloans (salliemae) these $160. Don't matter too much for me.

I have went through the ppt that you posted. It is inacurate and misleading. First it is not 2.88% but 2.77% now. Then with private companies (I can't speak for all of them) at least with sallie mae who participates in this program all of your benefits such as in residency deferment and all of the other terms of the loans are retained.

I guess the teaching point in this discussion is that each person needs to find out if their med school loans are all direct loans or through a prviate company. I have never heard of a 1.5%rebate reduction perhaps it is b/c my school loans were not direct loans like I have said. For me to consolidate with direct loans, which I still can since I have my undergrad loans with direct loans (you are required to have at least one loan with them to consolidate all your loans with them) is not adventagious for several reasons. 1. If there is this 1.5% rebate thing its only on 12K for me. 2. I will have to deal w/bureaucracy of the fed gov for 30 years (have you ever tried their phone support...) 3. they don't offer the same perks that sallie mae does.
Sorry to hear that you guys aren't offered direct loans which is weird, since as far as I know all US medical schools offer these loans since they have better interest rates but you used private lenders to finance your medical school probably at a higher rate (prime maybe?). You are right in that since you used private lenders you can "mostly" only consolidate with them. The 2.88% is the "weighted" average of all interest rates for your loans "with" federal loans though, I don't know about private lenders letting you do this though. If you have direct loans then everyone consolidates on the weighted average (private lenders or not and when you actually go out of grace period and into repayment at 3.2% (?) interest rate instead (again irregardless of whether you consolidate with the government or not). This means that the interest rate will NOT be 2.77% but higher and when you actually pay, it's even higher still. The reason you haven't heard about the 1.5% rebate is because it is through direct loans but "some" private lenders have their own rebates which you could lose when you go with consolidation with another lender (in this case you need to ask your FA AND your private lender). Perks are meant to be deceiving because the more they give the more they lose (and they are definitely not idiots when their CEO makes 30 million a year)... You are right in that your best bet is to consiolidate with your private lender cause the cost benefit is MUCH better with them since you probably got some incentive on the private loan at the beginning and would lose it if you went somewhere else... It's great to hear that Sallie Mae will let you defer during residency with your private loans!! With federal loans however, you can only defer with the federal government and lose it if you consolidate with private lenders...
 

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OK, lets clear something up for everyone.

1. I appreciate your concern.

2. Unfortunately you are still misguided. The private lenders, such as Sallie Mae participate in the FFELP therefore they are subject to all of the government regulation since the feds are still the guarantor. These are not the private loans you are thinking about, where the guarantor is another private company that charges insurance in case you default and therefore raises your interest rates. Such loans are called the alternative loans, and that IS NOT what I got. The loans I received were exactly the same as yours. THEY WERE STAFFORD LOANS, with subsidized portion of 8500/year and the rest unsubsidized. You also received Stafford loans but they were direct stafford loans (mine were medloans stafford loans). The same origination fees were applied to your and my loan. Also the same interest were applied for my Stafford loans as your direct stafford loans. Also the same defferement terms apply to your loans as my loans. Again, the terms of your loans and my loans were exactly the same as regulated by the FFELP. There is no question about this, period. The difference is that your lender was direct loans, my lender was medloans affiliated with bank one/sallie mae and serviced by sallie mae, and again regulated by the FFELP. I also know a little about the direct loans since I have about 12K of direct loans from undergrad. You have been misguided and you should do the calculations yourself instead of spiting out the garbage they fed you during your consolidation seminar. Since even if there is a rebate of 1.5% on the direct loans (for people who used direct loans as their lender in med school) this rebate is not worth much. Do the calculations. $150,000 consolidation loan x 1.5% = $2250. This is chump change compared to how much money the capitalized interest is going to be worth. If you think that the SallieMae CEO is pocketing this and making money off of you, you are highly misguided. Would you give anybody a loan of 150K to make 2K/30years (assuming everything else is the same between direct loans and medloans/salliemae and this constitutes your argument of where the "rich CEOs are riping us poor med students off").

Just to explain how business works. Direct loans is a nonprofit organization. It is also a governemtn agency and is highly inefficient bureaucracy (just like the postal service). Direct loans don't compete with the private sector becuase they can't. BTW, the money that both direct loans and the SallieMae do make off of you don't go directly to the CEO's pocket, contrary to what you think. In a business you have to pay your customer support staff, phone lines... The smart question would be, how can Salle Mae offer us med students the ability to fix such a low interest rate at 2.77% for 30 YEARS. This is well bellow the rate of inflation. This is not taking into account all the expenses that a company has to pay for to manage your loan. So how is this possible? Do they cover the rate of inflation and make a profit with your 2K (from 1.5% rebate) that you were so eagerly pointing out. Probably not, since 2K will not cover a 150K loan/30 years. The place where they make money is on people who default on their laons, the late payments... They can afford a few good borrowers who pay back their loans on time, and make up for any losses on those who go into collections. Look at their collections fees. Actually, these are pretty much the same with direct loans. This constitutes 80% of their business (I am not exaggerating on this one, look it up for yourself), both sallie mae and direct loans. Sallie Mae is much more profitable then direct loans and this why they are able to offer a more competative rate. Sallie mae has a 1% interest reduction after 48month of consecutive payments. So basically, if you are doing IM (3 years) and then fellowship (3 years) you will have 20 years of interest rate as low as 1.6 (-1%, and -0.25 with direct payment). 1.6% over 20 years is dirt cheap, and much better then 1.5% rebate upfront. Direct loans simply could not do this. Again consolidation with private companies, like sallie mae who are eligable to participate in the FFELP is better then using direct loans for consolidations. The terms of borrowing and consolidating ARE EXACTLY THE SAME FOR COMPANIES WHO PARTICIPATE IN FFELP, whether private company or direct loans! The difference is in the perks, period.

I would strongly suggest that you do the calculations for yourself, even if the direct loans offeres this 1.5% loan consolidation rebate for people who have borrowed with them.

Good luck
Please don't take any of this personal. I know a lot of this is confusing. I just don't want people to get more confused who are reading this thread.




EvilNewbie said:
Sorry to hear that you guys aren't offered direct loans which is weird, since as far as I know all US medical schools offer these loans since they have better interest rates but you used private lenders to finance your medical school probably at a higher rate (prime maybe?). You are right in that since you used private lenders you can "mostly" only consolidate with them. The 2.88% is the "weighted" average of all interest rates for your loans "with" federal loans though, I don't know about private lenders letting you do this though. If you have direct loans then everyone consolidates on the weighted average (private lenders or not and when you actually go out of grace period and into repayment at 3.2% (?) interest rate instead (again irregardless of whether you consolidate with the government or not). This means that the interest rate will NOT be 2.77% but higher and when you actually pay, it's even higher still. The reason you haven't heard about the 1.5% rebate is because it is through direct loans but "some" private lenders have their own rebates which you could lose when you go with consolidation with another lender (in this case you need to ask your FA AND your private lender). Perks are meant to be deceiving because the more they give the more they lose (and they are definitely not idiots when their CEO makes 30 million a year)... You are right in that your best bet is to consiolidate with your private lender cause the cost benefit is MUCH better with them since you probably got some incentive on the private loan at the beginning and would lose it if you went somewhere else... It's great to hear that Sallie Mae will let you defer during residency with your private loans!! With federal loans however, you can only defer with the federal government and lose it if you consolidate with private lenders...
 

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let me correct myself,

with salliemae you can lock in 26 years of 1.6% interest rate after 4 years of 2.6. The residency/fellowships don't count, b/c you will be in deferment
 

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As I understand it, we should only be consolidating AFTER graduation, is this correct? Interest rates are adjusted in July (?), so doing research on the options is fine, but hold off until June graduation and then act.

Any thoughts?

I have to say, 1.6% sounds GREAT to me. Is this the standard rate, or is this only for those with outstanding credit? I have many, many unsolicited offers recently, in the range of 3%, but have not been paying attention as my plan is to act after grad.


--Cap
 

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Dear Capsacin,

several things,

1. There is no credit check on the companies who consolidate under FFELP. It is standard to consolidate with anyone at 2.77 for most of your loans now. If one of your loans was disbursed before October of 98, then that loan has an interest of 3.57 (some stupid fed formula), the rest of the loans you got are at 2.77. If you do weighted-averages of all of your loans that you want to consolidate you may get it a little over 2.77. If you have a substantial amount of loans with an interest rate >2.77, there is a chance that wheighted averages will bring your overall rate to >2.875. If it is >2.875 they round it up to 3%. Basically, they round it up to the nearest 1/8th (2.0, 2.125, 2.25, 2.375, 2.5, 2.625, 2.75, 2.875, 3....). One thing you may want to do calculations on, is if you have one loan that just pushes you over that 2.875% to not consolidate that loan. that way you will lock in a rate of 0.125 lower and just schedule repayment on that other loan by yourself.


There are several catches to this consolidation process and you can take example from my situation. I had direct loans in undergrad that went into repayment early b/c I graduated a semester early. Things got mixed up as I was applying to med school and my loans went into grace==>repayment==>deferment. If you have such a situation with your loans (a better example is of someone who took time off before medschool, whose loans went into repayment and then back into deferment) then you have to consolidate only the loans from undergrad before you graduate to lock in that rate. Again if you have loans that went into grace==>repayment==>deferment, they will go back into repayment on the day you will graduate but not into grace. In that situation in June/May when ever you graduate, you will not be able to lock in the 2.77 rate on the undergrad portion of your loans (becuase in repayment the fed formula allows you to consolidate before July 05 at a higher rate, this usually applies to residents who are in repayment and are trying to consolidate now). My undergrad loans are 12K vs med school 129K, but still it is nicer to get all of the loans at the 2.77% (usually 2.875=>2.625 w/automatic pay=>1.625 after 4 years of no late payments). The trick for people who are in the grace==>repayment==>deferment situation is to consolidate your undergrad loans prior to graduating, therefore locking that low rate, then adding this consolidation to your med school loan consolidation that you will do after graduation.

ONe more place where you have to be careful. THe consolidation should be done for your stafford loans (either direct stafford, or private stafford, unsub and subsidized). Note both sub/unsub retain their terms of who pays their interest during deferment even after you consolidate (as long is it is with a company who participates in the FFELP either through direct loans or other private lender who wants to consolidate). Do not consolidate your perkins loans!!!!. Your can get gov to pay your interest in deferment on your perkins loans though your residency and fellowship. If you consolidate your perkins loans, they do not retain their terms in consolidation. You will be charged 5% on perkins loans if they are consolidated and that will increase your weighted average. You can always add your perkins loans to your consolidation many years down the line.

Also you cannot consolidate (under FFELP) your private loans, that includes the credit cards, alternative loans, the medex loans if you took one, like I did and other. that medex loans sucks a**. I should have read this before, but it has prime +1% interest without a cap! if you are late it goes up to prime + 2%. There is also a 1.5% fee charged at repayment.

Capsaicin said:
As I understand it, we should only be consolidating AFTER graduation, is this correct? Interest rates are adjusted in July (?), so doing research on the options is fine, but hold off until June graduation and then act.

Any thoughts?

I have to say, 1.6% sounds GREAT to me. Is this the standard rate, or is this only for those with outstanding credit? I have many, many unsolicited offers recently, in the range of 3%, but have not been paying attention as my plan is to act after grad.


--Cap
 

Capsaicin

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Thanks, that really helps! I do have about $18,000 of loans from undergrad that went grace-->repayment-->deferment, so I will contact Sallie Mae prior to graduating..I will follow suit on the med loans just after graduation. And thanks for the warning on the Perkins, that's a good one.

Appreciate the assistance, I'll definitely bookmark this thread and reference it.

:cool:
 

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EvilNewbie said:
I just learned that you pay an additional 1.5% if you consolidate through a private lender!! UHEAA will give you 1.25% back but you still pay .25% more!! However, Direct Loans will give you .25% if do you automatic withdrawal whereas UHEAA gives 1% back after 4 years (?). Meaning that you only get a .5% reduction for all that work and it may not even be worth it since private lenders don't let you defer during residency.... No wonder the private lenders are making millions off students shame on them when MOST of the students going through private lenders end up paying more in the long run.... anyone with different opinions? Leave it to corporate America to rob you even when you are poor!
Actually Total Higher Education (THE) has the best deal. Better than both UHEAA and Direct Loans.
 

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Do you mind posting their incentives? Or a link? Thanks.
 

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there is something fishy about this T.H.E. plan
I looked all through their website and there is no clear explaination of what this "repayment bonus payment of 0.75%"

if its an upfront 0.75% principle reduction, then its crap, b/c from 150K that would be only 1000 discount over 30 years. If its a 0.75% interest rate reduction from 2.875 then it still does not beat Sallie Mae. Sallie Mae goes down to 1.625 after 4 years, and this one 2.125 from the start. If you do the amortization, the difference is huge over 30 years.

If it works some other way, I'd appreciate it if someone would explain it to me and show me how to do the math.

(One thing I really like about Sallie Mae is that their website is easy to understand) You know exactly what you are payming for and what the numbers are and what the formulas are. I hate it when it is hiden/confusing b/c that is how you get riped off in the end.
 

OSUdoc08

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PCN said:
there is something fishy about this T.H.E. plan
I looked all through their website and there is no clear explaination of what this "repayment bonus payment of 0.75%"

if its an upfront 0.75% principle reduction, then its crap, b/c from 150K that would be only 1000 discount over 30 years. If its a 0.75% interest rate reduction from 2.875 then it still does not beat Sallie Mae. Sallie Mae goes down to 1.625 after 4 years, and this one 2.125 from the start. If you do the amortization, the difference is huge over 30 years.

If it works some other way, I'd appreciate it if someone would explain it to me and show me how to do the math.

(One thing I really like about Sallie Mae is that their website is easy to understand) You know exactly what you are payming for and what the numbers are and what the formulas are. I hate it when it is hiden/confusing b/c that is how you get riped off in the end.

It's not up front. It is based upon making payments in a timely manner throughout the course of repayment.
 

PCN

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OSUdoc08 said:
It's not up front. It is based upon making payments in a timely manner throughout the course of repayment.

customer support at T.H.E. sucks. It is open only 'till 5. I won't be able to get off till 6 for the rest of the month.

I still don't understand this "based upon payments in timely maner". Is this the same as what sallie mae offers. Is this a straight interest rate reduction of 0.75%. If you calulate the total repayment for $150,000 on sallie mae vs T.H.E. , T.H.E. is lower. but T.H.E. does not explain how they derive this. I can't imagine this being from straight interest rate reduciton since Sallie Mae gives higher interest rate reduction.

I have a problem working with companies who don't keep customer support open for good hours and who do not offer clear explainations
 
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EvilNewbie

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PCN said:
customer support at T.H.E. sucks. It is open only 'till 5. I won't be able to get off till 6 for the rest of the month.

I still don't understand this "based upon payments in timely maner". Is this the same as what sallie mae offers. Is this a straight interest rate reduction of 0.75%. If you calulate the total repayment for $150,000 on sallie mae vs T.H.E. , T.H.E. is lower. but T.H.E. does not explain how they derive this. I can't imagine this being from straight interest rate reduciton since Sallie Mae gives higher interest rate reduction.

I have a problem working with companies who don't keep customer support open for good hours and who do not offer clear explainations

There are calculators on T.H.E consolidation stuff on their own website to compare... it works out that UHEAA is less than T.H.E. on the 30 year loans so its not all that great...
 

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Don't get too excited about these calculators. There are many assumptions in these calculators. Just becuase you get a lower figure does not mean anything unless they give you the formula of how they figured it out. 0.75% interest rate reduction does not explain it. If you do 30 year amortization, with 2.77-0.75% you get a figure much higher then what the calculator gives you. There are some hidden assumptions that will probably not apply to you and you will get screwed if you don't read the small print.

BTW, dear EvilNewbie are you still going with direct loans consolidation?

EvilNewbie said:
There are calculators on T.H.E consolidation stuff on their own website to compare... it works out that UHEAA is less than T.H.E. on the 30 year loans so its not all that great...
 

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PCN said:
Don't get too excited about these calculators. There are many assumptions in these calculators. Just becuase you get a lower figure does not mean anything unless they give you the formula of how they figured it out. 0.75% interest rate reduction does not explain it. If you do 30 year amortization, with 2.77-0.75% you get a figure much higher then what the calculator gives you. There are some hidden assumptions that will probably not apply to you and you will get screwed if you don't read the small print.

BTW, dear EvilNewbie are you still going with direct loans consolidation?

Just called and talked to T.H.E.

FYI,

the 0.75% bonus that they offer is calculated based on your balance. So basically, if you are starting balance is 150,000 your T.H.E. monthly contribution will be 150K * 0.75/12 = 93.75. You can either decrease your payments by that amount, or apply that to the balance after your payment (which brings down the principle faster). As you keep paying off your balance your bonus decreases (example, when you get to 50K left your monthly bonus will only be 31.25, and if you are applying it to your payments, then your payment (for 150K for 30 years = ~620) will be reduced by only 31.25. T.H.E. does not offer direct pay 0.25% interest rate reduction. The benefit of their plan is that you start getting your bonus at the begining and they eliminate it only when you are late >60 days.

conclusion:

Sallie mae is still way better if you can make absolutely sure that you will pay on time x 30 years.
 
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EvilNewbie

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Well, I took what you guys said and confronted the FA department... they kept running in circles in their argument... especially with you have to deal with more people and stuff... so I went to the undergrad FA and talked to them... you know what they did?? They called and use speakerphone to talk to the medical school FA... I was like... what the *#(%^ ... okay, so I went to www.fafsa.org and use their calculators... to do the math myself... and figuring the rebates and everything... It seems at 75k you pay about 87k with UHEAA (1.25 and 1% reduction) and with the GOV you pay about 120k (but you can defer... but those interest adds up BIG still with the unsub)... I called UHEAA and asked about forebearance and deferment and basically at 45k stipend you can qualify for 80k debt deferment for 1 year only (since stipend increases next year you don't get deferment but you can go into forebearance)... HOWEVER, if you go into deferment or forebearance you continue at the regular interest rate of 3.37% (2.77 + .6% in repayment period) instead of the 1.25% reduction rate... UHEAA won't do alternative loan consolidations as well but only stafford, perkins, and plus loans. Sallie Mae I saw only gave .25% and 1% reduction? Figuring into the calculator, UHEAA still wins out? I tried using other calculators on other lender sites and UHEAA still wins in the lowest interest and by wide margins as compared to the GOV even with the lost of the rebates offered by the GOV. So my plan is to go with UHEAA and defer for one year while I pay off the private loans and make sure you guys PAY the interest otherwise it get capitalize at the end of the deferment/forebearance which costs an extra ~2k (for 75k loan)... Good thing about UHEAA is that they only capitalize at the beginning of repayment whereas the DL told me they do quarterly (? I think) as well as at the beginning of the repayment.
 

seacatch

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Thanks all for spending so much time explaining your information. I would like to get your opinions on the following...

I am a non-trad and will be entering med school in the fall. I'm much older and have excellent credit and no student loans...yet. I do have savings but I expect to borrow about $40K per year. When I begin to repay the loans, I will likely pay everything on time and choose automatic debits.

Sooo... I have fresh decisions to make. I figure I'll do the Stafford loans and I want the best deals. It's ok with me if I don't get every nickel up front. How would you do this?

Thanks in advance.
 

PCN

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1. read everything on this forum x 3
2. go to your fin aid officer and spend some time figuring out all of the details
3. double check what your FAO is telling you by calling the lender directly and confirming the terms of the loan.
4. Realize, that you will prob never get to lock in as low of interest rate on your stafford loans as we can now. The gov is passing legislation to prevent you from being able to lock in a fixed rate on your FFELP loan consolidation (stafford and some other fed loans). You will be able to consolidate but the consolidation loan will still be variable.
5. don't be affraid to take perkins loans. These loans have a lower fixed interest rate of 5%. Not as low as the current rates. However these will not change. the rates on the stafford, now at 2.875% (if borrowed before oct '98) will go up, they are currently caped at 8.25% and I think with the new legislation will continue to cap at that rate.
6. be careful on the private loans.
7. try to get grants and scholoarship. A lot of scholarships are financial status dependent not scholastic dependent contrary to what one may think.

good luck

seacatch said:
Thanks all for spending so much time explaining your information. I would like to get your opinions on the following...

I am a non-trad and will be entering med school in the fall. I'm much older and have excellent credit and no student loans...yet. I do have savings but I expect to borrow about $40K per year. When I begin to repay the loans, I will likely pay everything on time and choose automatic debits.

Sooo... I have fresh decisions to make. I figure I'll do the Stafford loans and I want the best deals. It's ok with me if I don't get every nickel up front. How would you do this?

Thanks in advance.