Possible Breaking News for all of us on Loans

[DcS]

I do not claim to be an expert on student loans, but I do think I follow them a lot more closely than most people do. Recently there had been some discussion here about consolidation. Unfortunately (in the past hopefully), you could not consolidate loans until graduation. For those graduating in 2005 (now), they have the great opportunity to consolidate at the current record low loan rates. Unfortunately, judging by the most recent T-Bill, the loan rates will be increasing to about 4.6%, a considerable jump. I think for a 125k loan that is a 40k difference in interest, which is substantial. Well, I got an email from graduate leverage with breaking news, I will let you read it below. Basically, for those on FFEL school loans (which most are), you will probably have the chance to consolidate your loans NOW, in school, at 2.87%, if it's done by July 1st. Here is the email I received, when I get the specific update on Thursday I will be sure to post.

Dear fellow students,



Graduate Leverage is excited to announce a change in student lending policy which will allow virtually every student attending a FFEL school to complete an in-school consolidation. Previously, only students with Direct Loans were eligible to complete an in-school consolidation. Given this recent development, you should now have the ability to fix your loans at the pre-July rate of 2.875% (vs. the likely post-July rate of 4.625%).



As of late Monday, the major lenders have announced their willingness to allow in-school consolidation, and we expect that the remaining lenders will follow suit. Given this substantial rate difference, you can expect to save the following amounts in interest payments over the life of your loans dispersed to date:

* Medical/Dental/Vet Student Savings approximately $43,000
* Law Student Savings approximately $15,000
* MBA Student Savings approximately $4,000

We wanted to communicate the message immediately as we know many of you are leaving school for break or entering rotations. We will send you an email on Thursday informing you of all the necessary steps to complete an in-school consolidation. If you could, please save your questions for us until after you have received and read Thursday's email as it will provide you with a clearer picture of the necessary steps to take.



Lastly, if other classmates would like to receive Thursday’s email as well they can sign up to receive it at the following link: http://www.graduateleverage.com/reservation.



Best regards,

The Graduate Leverage Team

---

Members don't see this ad.

 

[DcS]

For those not familiar with Graduate Leverage, here is some info in this thread. This does NOT mean you possibly can only do this through them, but just some info on what they are about. You can also check out their website www.graduateleverage.com as well. This is NOT an ad.


http://forums.studentdoctor.net/showthread.php?t=184837&highlight=graduate+leverage

 

[MadameLULU]

I'll be starting med school this fall and I have about 24K worth of grad. loans (Stafford). Do you recommend consolidating these loans before I start med school?

 

[DcS]

I'll be starting med school this fall and I have about 24K worth of grad. loans (Stafford). Do you recommend consolidating these loans before I start med school?

If it were me I would definitely consolidate. You could lock in your interest rate at least 2 pts less than in the future. Remember now the 2.8% is the lowest ever...historically I think the average is like 6 or 7% and most likely will approach that when you graduate med school. If you consolidat now you can defer while you are in school so you won't have to pay it. Call your lender to find out more, they will help you.

 

[double elle]

About Graduate Leverage...

I just wanted to say (and I have posted this on many other consolidation threads) that I attended a meeting a GL guy gave at my med school. I am a 4th year getting ready to graduate and go into surgery. My questions had to do with deferrment (do I qualify since my husband makes good money?) and the overall timing of consolidation. So, I went to the meeting. I can't say enough how impressed I was with this guy. He was a graduate student himself and was very candid about his loans, what GL's mission is, and the entire program simply blew me away. I left the meeting with a very important question - essentially, my husband and I had already submitted plans for a house...but after attending the meeting, I wasn't sure if I would qualify for deferrment...eeks.....a new house payment PLUS student loan payment. We simply couldn't do that without giving up many of the things we like to do. So, when I got home that evening I called their 800 number and left a message. Someone (I think Andrew, maybe??) called me back THAT NIGHT - oh, did I mention it was a FRIDAY? Yeah, he calls me back about 6:30 pm and answers all my questions. Again - I was so impressed.

So, I submitted my info on line and they contacted me with their recommendation. I have filled out the app, but haven't electronically signed it yet because I want to take the final consolidation deal to my financial aid advisor to make sure he thought it was a good deal. Even though I am almost positive I'll consolidate with GL, I would like to have another opinion.

If you go to their website, they have a place where you can look at their history and all about what they do. If you have questions - simply CALL or email them. They really have been great! For those of you thinking I am plugging for them because I actually work for them...No, I am a 4th year at KCOM in Kirksville, MO. I have a 2-year old daughter and I am going into surgery - my time is valuable...and these guys really helped me save some!

 

[smc927]

You may want to call your undergraduate financial aid office and get their opinion on the issue. There are some catches to consolidating and they can help clue you in.

 

[TommyGunn04]

I've been looking into this all afternoon. Here's SallieMae's deal. They'll lock in your federal direct loans at 2.875% (maybe higher if you have other types of higher-interest loans; it's done as a weighted average), plus they're offering benefits! The downside is that you lose your 6-month grace period after graduation. This isn't an issue for those of us who get a subsequent deferrment while in internship/residency, such as an economic hardship deferrment. Also, you get a .25% reduction in your interest rate if you do direct debit once you enter repayment, and a 1% reduction in your rate if you make your first 33 payments on time! Unfortunately you lose your cash-back "Medloans" benefits, if you happen to have this type of loans.

DirectLoans (loanconsolidation.ed.gov) offers the .25% reduction with direct debit, but they don't seem to offer any other benefits. However, they DO allow you to keep your 6-month grace period.

Is anyone else planning to consolidate now, while still in school?

 

[kirk002]

I'm probably going to consolidate while in school. I want to see the rates come end of may but it looks like they will stay high. I will probably wait and see what graduate leverage comes up with. Sallie Mae looks pretty good. The questions i am not sure of are if you go into deferment while in med school is there any max length time of deferment?? or is it just that after so many years you have to go into economic hardship during residency and the interest isnt paid?? also if i consolidate before june 30th, how do you add the rest of your fourth year loans into the consolidation process?? i saw on sallie mae that you could add loans within 180 days?? anyone know anything about this??


kirk

 

[kas23]

I've been looking into this all afternoon. Here's SallieMae's deal. They'll lock in your federal direct loans at 2.875% (maybe higher if you have other types of higher-interest loans; it's done as a weighted average), plus they're offering benefits! The downside is that you lose your 6-month grace period after graduation. This isn't an issue for those of us who get a subsequent deferrment while in internship/residency, such as an economic hardship deferrment. Also, you get a .25% reduction in your interest rate if you do direct debit once you enter repayment, and a 1% reduction in your rate if you make your first 33 payments on time! Unfortunately you lose your cash-back "Medloans" benefits, if you happen to have this type of loans.

DirectLoans (loanconsolidation.ed.gov) offers the .25% reduction with direct debit, but they don't seem to offer any other benefits. However, they DO allow you to keep your 6-month grace period.

Is anyone else planning to consolidate now, while still in school?

This post is riddled with incorrect information. First, the benefits you mentioned (which are wrong, btw) are offered by most consolidation companies, if not all of them (one notable exception is DL). The correct benefits are 0.25% rate reduction with automatic withdrawal from your bank account and 1% after 36 consecutive payments (not 33). Lastly, you do not lose your grace period. They just delay the completion of the application until the end of your grace period, but you retain the interest rate of the time you first filed your application.

 

[PTOSIS]

Bellow is the email we got from my school. i am still a little confused on the topic on whther to consolidate the first 2 years of tuition, approx 70K
-------------------------------------------------------

Dear student,

Stafford Loans interest rates are projected to increase in July. The current rate for in-school status is 2.77%. Based upon today?s T-bill, interest rates will rise to 4.61% in July 2005. With In-School Consolidation it is possible for you to lock in your rate at today?s lower rate. However, prior to making any decision it is important for you to understand all of the implications.



If you decide to consolidate now it will have the following impact on your loans:



1. You will forfeit your 6 month grace period. ? This means after you complete your schooling you have to repay your loans immediately.

2. You will lose the interest subsidy for your Stafford Subsidized loans.

3. You will lose all repayment benefits from your lender.

4. Your current interest that is capitalized will be added to your new consolidated loan now and again at the end of your schooling if you decide to consolidate again.

5. You can?t get a new disbursement while your loans are in re-payment status. This means, your fall disbursements will be delayed. NYCOM Financial Aid will not be able to do any follow up until all fall disbursements are received for all class years.

6. All applications must be received by your lender prior to June 30th.


If you decide to consolidate, please be aware that your loans will be in re-payment status and it is your responsible to be sure your loans move into an in-school status. This is not automatically updated. Your failure to follow the whole process through may result in default.

Please be aware that this is uncharted territory for the Department of Education, Lenders, Servicers and Schools.



If you are interested in consolidating your loans we encourage you to speak to your lender today. We also encourage you to apply on-line to ensure that the June 30th deadline is met.

 

[TommyGunn04]

This post is riddled with incorrect information. First, the benefits you mentioned (which are wrong, btw) are offered by most consolidation companies, if not all of them (one notable exception is DL). The correct benefits are 0.25% rate reduction with automatic withdrawal from your bank account and 1% after 36 consecutive payments (not 33). Lastly, you do not lose your grace period. They just delay the completion of the application until the end of your grace period, but you retain the interest rate of the time you first filed your application.

My post is NOT "riddled with incorrect information," but I'll tell you why yours is: I'm talking about IN-SCHOOL CONSOLIDATION, not consolidation upon graduation!!! But thanks for not giving me the benefit of the doubt.

Also, I never meant to imply that these incentives aren't offered by other consolidation companies...I was just providing some information that I wished I had known before I spent all afternoon on the phone with various lenders. You're right though, I did make one mistake...it's 36 months, not 33 (http://www.salliemae.com/manage/borrower_benefit.html). I was confusing this with the Medloans cash back benefit, which indeed is 33 months (http://www.salliemae.com/manage/medrewards.html). You see, I've done my research. But I'd like to know where you got the rest of your information, because these are things I've been told directly by the SallieMae Concierge people, who specialize in Medloans consolidations. I talked to 3 different ones today, and all three said you "lose your grace period," and the last poster's message suggests the same. Did you realize I was talking about in-school consolidation? It's a whole different ballgame! You're right that for graduating seniors they indeed do delay the completion of your application to help ensure that you retain your grace period (and it's not always possible I might add), but for people like me, who are trying to do the newly offered in-school consolidation, you do indeed lose your grace period with SallieMae, unfortunately. Re-read the first post, which was referring to this new option of in-school consolidation.

In any case, can't we be civilized? We're just trying to help each other out here. Sheesh!

 

[tkim]

This is what GL sent me:

"In the last two weeks most major lenders have shifted their policy regarding Federal student loan guidelines. This change affords students the ability to request “repayment status” on their student loans. This is important because once in repayment students are eligible to consolidate their loans and receive a fixed rate. Furthermore, due to the fact that a student electing to do this would still be enrolled, the loans may immediately be placed in an in-school deferment. As a result you can now consolidate all your outstanding loans at this year’s in-school rate of 2.875% (vs. next year’s expected rate of 4.625%). Once consolidated, your loans would remain in deferment, retaining their subsidy. The one trade-off put forward by lenders is that you will loose your grace period (6 months after graduation when you make no payments) on the loans you consolidate.

The Graduate Leverage Team has reviewed your federal loans and determined that you have Federal lenders and therefore you have the option of consolidating with the lender of your choice. In order to consolidate you will need to:

Fax each of your lenders an early repayment and in-school deferment request, which can be found at: Request Form. The Federal guidelines require that you make your request in writing, and we have included a link to lender fax and phone numbers Contact Sheet. If you do not know who your lenders are you can find this info at: Loan Locator.

Once your loans have been changed to in-school deferment status you will be able to consolidate your loans with the lender of your choice.

Graduate Leverage is pleased to announce that through our collective bargaining power we have secured a lender willing to: 1) Honor our full grace period, and 2) Offer us a 1% interest rate based on timely payments. To honor our full grace period they have agreed to suspend our payments and pay all of our subsidized interest during our grace period. Graduate Leverage will be sending you an application for consolidation early next week with our recommended lender and this deal.

You will want to refrain from completing an application for consolidation until your lenders have agreed to place you into repayment. We are monitoring individual lender policy closely, and while most lenders are allowing this, there are still lenders that are abstaining. We are updating our list daily, so feel free to call us if you would like confirmation of your lender’s policy. If your lender refuses to complete your consolidation in this manner, then you are free to consolidate with the Direct Loan program and lock in the same rate. This will not require the additional step of entering repayment, and can be done at: Direct Loan Consolidation. We offer this as an alternative as we know there will be some lenders who refuse to extend this opportunity to their borrowers.

Lastly, there are only 45 days until July 1st. Given the limited time available to take advantage of this savings opportunity we ask for your help in communicating this opportunity to fellow students. Please spread the word. Students in-school can determine their eligibility at: http://www.graduateleverage.com/reserve1.asp.

Best regards,

The Graduate Leverage Team"

 

[TommyGunn04]

2. You will lose the interest subsidy for your Stafford Subsidized loans.

Has anyone else heard this??? I certainly wasn't told this! Losing the subsidy changes things quite a bit for those of us who aren't graduating this year. Based on what I was told by the SallieMae and the Direct Loans people, this is not correct. (http://www.salliemae.com/apply/borrowing/smartloan/learn_more.html)

I've consolidated a subsudized Stafford loan in the past, from college, and I definitely didn't lose my subsidy...it's still interest-free while I'm in medical school.

I wonder if this e-mail Ptosis received is very specific to the particular lender NYCOM deals with. Also, the "you will have to repay your loans immediately" part of the message isn't necessarily true, as you can apply for and be granted an economic hardship deferrment before your first payment is due (60 days after graduation with SallieMae; I don't know if other lenders are the same).

This whole process is so confusing!!!

 

[TommyGunn04]

Once consolidated, your loans would remain in deferment, retaining their subsidy. The one trade-off put forward by lenders is that you will loose your grace period (6 months after graduation when you make no payments) on the loans you consolidate.

Bingo! This is exactly what I've been told by SallieMae and Direct Loans.

(however, note that if you consolidate with Direct Loans you do NOT lose your grace period; check 'em out at http://loanconsolidation.ed.gov )

 

[kas23]

In any case, can't we be civilized? We're just trying to help each other out here. Sheesh!

First of all, don't get your panties in a bunch. I'm sorry, I didn't realize you were talking about in-school consolidation. It is always safe to assume that people are doing grace-period consolidation, since that is what most people have been doing...up until now. It would be hard to believe what anyone says about in-school consolidation because no lending company has been doing it. So, be careful what you believe and get it in writing. And this in-school consolidation thing is no a sure thing yet. Law makers are still trying to make sense of it. I will post an article below. The safest thing for people would be to consolidate with Direct Loans if you can. You need to be at a Direct lending school. They have been doing in-school consolidation for a long time and know the ins-and-outs and offer good benefits, mainly you get to keep your grace period. They do not offer the rate reductions though. So you would benefit by taking out more loans in school, then reconsolidating with a company who gives the rate reduction benefits. Of course, this will involve your final consolidated rate to bump up a little, but certainly no where close to 4.71%.

 

[kas23]

A Novel Way To Tackle Student Loans

Lenders, Schools Say Loophole Opens Door for Far More People To Lock In Low Interest Rates

By ANNE MARIE CHAKER
Staff Reporter of THE WALL STREET JOURNAL
May 12, 2005; Page D1

This year, hundreds of thousands of students are expected to do something never before considered possible in the 40-year history of the Federal Family Education Loan Program: Consolidate their student loans while they are still in school.

That would allow them to lock in today's rates on student loans before the rates are poised to rise in July. The current rates available on consolidation loans are as low as 2.88% -- the lowest in the program's history. With lenders offering a slew of discounts for automatic and on-time payments, that rate can be knocked down even more.

The opportunity to consolidate loans is one of the key features of the government program, which guarantees loans offered through private banks. It gives people a one-time opportunity to refinance their student debt from different sources into a single, fixed-rate loan.

Traditionally, though, students had to wait until after graduation to do this. That is because the program's rules state that borrowers must begin repaying their student loans (or be in a six-month "grace" period after graduation) in order to become eligible for consolidation.

But now, college financial-aid departments and others in the education-finance world are touting what they say is a loophole in the Higher Education Act that authorizes the government program. The upshot, they say, is that students can go into repayment while still in school and thus become eligible to consolidate. Many lenders are saying it isn't even necessary to actually begin repaying right away, just to indicate your intention to do so.

STUDENT REFINANCING

Some lenders that will allow loan consolidation by borrowers who are still in school:

• Nelnet Inc.

• Collegiate Funding Services Inc.

• NorthStar/Total Higher Education*

• Edamerica


*Only for students at schools where it already does business

Source: The lenders

The Department of Education has yet to rule on the validity of this interpretation. But with rates likely to rise significantly this summer, some schools are urging that both graduating and continuing students consider consolidating this spring. At the University of California, student financial-support coordinator Nancy Coolidge has been working to encourage tens of thousands of borrowers on the 10-campus system to take advantage of consolidating at current rates. "We are very confident that this is very legal," she says.

A number of lenders, including Nelnet Inc. of Lincoln, Neb., one of the biggest players in the consolidation-loan market, say they will refinance loans for current students. And behemoth student-loan company SLM Corp., better known as Sallie Mae, is making preparations in anticipation of a green light from the Department of Education, which governs both FFEL and the separate William D. Ford Federal Direct Loan Program.

There are some caveats to the approach. While many are hoping that the Department of Education will approve the approach in the near future, there is a chance that it could give a thumbs down and disallow any refinancings that have been done by students still in school. In that case, students would still have their underlying loans, but they would lose the refinancing. "We believe guidance will be needed and we are working on answering the questions we've received," says Stephanie Babyak, a spokeswoman for the department.

In addition, borrowers lose a six-month grace period after graduation, during which they don't have to pay any bills. Many lenders say that if they shift a current student into repayment, they will also allow a deferment until graduation so the borrower doesn't have to repay loans while still attending classes. But repayment would begin immediately after graduation.

Finally, any loans taken out after consolidation would carry the interest rate at that time, and not the current low fixed rate.

This in-school consolidation also doesn't make sense for every student. Many lenders require minimum balances of $7,500, and a first- or second-year student may not have accrued that much debt yet. And students would lose the opportunity to consolidate the entirety of their student loans at once after graduation. (Though they could later consolidate other loans acquired during the rest of their schooling.)

Nevertheless, finance experts expect a rush of undergraduates and grad students seeking to consolidate now. That is because in July, student-loan rates could rise by about two percentage points when they get their annual revamp. Because the rates are reset only once a year, they will likely reflect pent-up interest-rate increases. Also, the Bush administration has proposed changes to the federal program -- including shifting consolidation loans to a variable interest rate -- that could fuel the popularity of consolidating now.

In 2003, more than one million borrowers consolidated nearly $35 billion in FFEL debt. This year, that many or more in-school borrowers could seek to consolidate, increasing the refinanced debt by at least $10 billion, says Mark Kantrowitz, publisher of FinAid.org, a free Web site of financial-aid information. The added refinancings could be costly to the government, he points out, because the government subsidizes the interest rate that lenders get on federally guaranteed loans.

Graduate Leverage LLC, a Cambridge, Mass., consultant that negotiates borrower terms on behalf of graduate students, plans to send an email today to members about its efforts in encouraging lenders to use the new approach. Members who aren't graduating this year carry an average of $52,000 in federal debt. On average, they would save $17,000 over the 25-year life of their loan by consolidating early and at current rates, says the group's co-founder Daniel Thibeault.

At the University of Southern California, Associate Dean Catherine Thomas has sent emails out to more than 2,000 continuing graduate students with balances of as high as $200,000, suggesting they discuss the option with their lenders. "There is an opportunity for them that may not be there a year from now," says Ms. Thomas.

San Francisco-based Chela Education Financing Inc. says it will provide in-school consolidations to students who call and ask for it. However, "we're not marketing this," says Jon Hayward, business-development manager.

Edamerica, the student-lending unit of Knoxville, Tenn.-based nonprofit Edfinancial Services, also says it will offer in-school consolidation to students who call and request it, but will first offer counseling to students, making them aware of any potential pitfalls.

Sallie Mae has held conference calls with school representatives to go over how the early-consolidation process could work. "We want to be able to accommodate everyone who wants to consolidate," says an official with Sallie Mae. "But we want to be sure what we're interpreting is consistent with the department's interpretation."

Others are coming out more boldly. Nelnet put a pitch right up on its Web site: "Are you still in school? Find out how to consolidate your student loans and secure a fixed interest rate!" In the absence of any guidance yet from the Education Department, says Nelnet spokeswoman Cheryl Watson, "we're moving forward."

Write to Anne Marie Chaker at [email protected]

 

[GeneGoddess]

Regarding that letter sent out:

If you decide to consolidate now it will have the following impact on your loans:
1. You will forfeit your 6 month grace period. ? This means after you complete your schooling you have to repay your loans immediately.

FALSE: This depends on the company you consolidate with. DL allows you to keep your grace period if you consolidate while in school (versus grace period).

2. You will lose the interest subsidy for your Stafford Subsidized loans.

FALSE: Depends on the lender for sure. My husband consolidated while in school last year with DL (his loans are DL loans). His subsidized loans are still subsidized.

3. You will lose all repayment benefits from your lender.

FALSE: Again, it depends on the lender.

4. Your current interest that is capitalized will be added to your new consolidated loan now and again at the end of your schooling if you decide to consolidate again.

Unsure about this one. If they are talking about interest that is acruing on a subsidized stafford, that is false (depending on the company).

5. You can?t get a new disbursement while your loans are in re-payment status. This means, your fall disbursements will be delayed. NYCOM Financial Aid will not be able to do any follow up until all fall disbursements are received for all class years.

FALSE: (may be school dependent). Husband had NO problems consolidating last April (2004) and receiving his dispersements in June, August, and December.

6. All applications must be received by your lender prior to June 30th.

TRUE: Obviously


The whole point is: READ THE FINE PRINT.

 

[randomlogik]

How do I figure out if my school is a direct loan school or not? I thought I heard at one point that we are not, but I can't seem to confirm this anywhere. I do know that none of my loans are direct loans, so I am guessing that I won't be able to use them to consolidate my loans.

 

[TommyGunn04]

How do I figure out if my school is a direct loan school or not?

Contact your med school's financial aid office. They should be able to tell you better than anyone else.

Also, to see what specific types of loans you have, if you don't already know, you can see your entire record via the National Student Loan Data Service, at http://nslds.ed.gov/. Click the "financial aid review" button and enter your info. You'll need your FAFSA PIN to access this site.

Also, check out http://loanconsolidation.ed.gov/. The following page tells you about eligibility: http://loanconsolidation.ed.gov/borrower/beligible.shtml. According to this, you don't even have to be at a "direct loans" school, as long as you have at least one "direct loan."

 

[mpp]

The Direct Loan requirement is no longer needed. Anyone with Stafford loans (whether Direct or not, whether in-school or not) is now eligible for consolidation.

 

[kas23]

The Direct Loan requirement is no longer needed. Anyone with Stafford loans (whether Direct or not, whether in-school or not) is now eligible for consolidation.

Wow, thank you. For those of you who want this whole thread summarized into two sentences, read the above post.

 

[bryan45876]

This is great news. Everyone should take an active role in managing their finances and I feel bad for the people that have the "I'll worry about that later" attitude.

The way I see it is 5-10 hours of my time now will save thousands of dollars in interest later. Just my 2 cents.

 

[kas23]

This is great news. Everyone should take an active role in managing their finances and I feel bad for the people that have the "I'll worry about that later" attitude.

The way I see it is 5-10 hours of my time now will save thousands of dollars in interest later. Just my 2 cents.

My GF is a 3rd year will a little under 100K in loans. By consolidating before July 1st, she will be saving 37K in interest. For the people who will "deal with it later," they are right. They will deal with it later.

 

[Bounty]

The Direct Loan requirement is no longer needed. Anyone with Stafford loans (whether Direct or not, whether in-school or not) is now eligible for consolidation.

the difference is whether you have to enter repayment first right?

 

[bryan45876]

the difference is whether you have to enter repayment first right?

The 1st step is to tell all of your lenders that you want to enter repayment, you voluntarily waive your grace period, and that you want all of your loans to remain in deferrment.

Then you can go to any lender and consolidate with them. Graduate Leverage (http://www.graduateleverage.com/) has worked out a deal where you are able to keep the grace period, but even if you can't consolidating now is the way to go.

 

[DcS]

There's no point in arguing over specifics, because the details will all differ with each specific lender. For example, for those in NC, with College Foundation you do lose your grace period and your subsidized loans do turn into unsubsidized loans (and rack up interest). Their borrower benefits are amazing, whereas with direct bank draft and 48 mos of straight payments they will give a 2.25% reduction, basically placing our loans at 0.5% interest.

For the those still skeptical, this is the real deal and it would be beneficial to take advantage. But hey, it's your money.