Possibly lock in fixed consolidation loans while still in school??? I did it!!!


10+ Year Member
5+ Year Member
Feb 10, 2005
I am a current M4 student. When loan people tell you that you can't consolidate while you are still in medical school, they may not be telling you correctly. I CONSOLIDATED THE MAJORITY OF MY LOANS THIS PAST YEAR, AND I AM STILL IN MEDICAL SCHOOL!!!

In my situation, private loan companies that dole out federal loans, such as EdAmerica, could not consolidate my loans while I was still in school, but I found out that Direct would consolidate my loans while I was still in school. I believe Direct was able to offer in school loan consolidation to me, because they are associated with the government and have their own regulations. They are the only ones that I know of that offer in school consolidation loans. You can check out their website at http://www.loanconsolidation.ed.gov/

I consolidated all but this last year worth of my loans. By consolidating all but my last year of loans and leaving my last year of loans with EdAmerica, I believe I am now in a better position to take advantage of more options.

By consolidating the bulk of my loans, I have locked in a "low" fixed interest rate for myself on that portion of my loans. Even if legislation passed this afternoon stating that all future consolidation loans would have variable interest rates, the bulk of my loans are locked in at the current interest rate since I have already consolidated them with Direct. That may be something that others would want to research (don't trust me...do the research and speak with a professional) as a possibility since interest rates may go up in the future (of course, they could go down) and variable interest rate consolidation loans may be coming in the future as well. I'm not trying to scare anyone; I'm just saying that it is possible.

By leaving my last year worth of loans unconsolidated, I should be able to reconsolidate when I graduate in May '05. I was told that if I had all of my loans with one company, then I could only consolidate with that one company. The people at Direct told me that this wouldn't apply to me now, because I have one loan with Direct and another with EdAmerica. For this reason, I was told that I will be able to shop around for the best consolidation loan for all of my loans rather than being forced to consolidate with only one particular company. Of course, EdAmerica has called and would like for me to reconsolidate with them. I'll just have to see how competitive their incentives are.

Basically the reason that I did what I did is that, in my situation, if the rules regarding consolidation loans don't change before I reconsolidate after graduation, then it will be almost as if I did nothing at all except provide myself with the option to shop around for the best consolidation loan perks/company that I can find (Direct offers the 0.25% electronic payment reduction but nothing else that I know of--After I graduate I will shop for a private company that also has the 1% reduction after so many on-time payments).

I was told that, in my situation, even the interest rate that I locked in on my '04 Direct Consolidation loan will not change until after my graduation since I locked it in after the interest rate change for '04. Direct said that interest rates, at present, are only changed once per year and that it would not change until after I graduated (July, I think).

If, however, the rules regarding future consolidation loans change for the worse, in my opinion (some people like the idea of variable rate consolidation loans for various reasons such as if interest rates go down), and future consolidation loans for whatever reason go to a variable interest rate prior to my graduating, then I simply will not reconsolidate after I graduate (I would keep my current fixed interest rate consolidation loan with Direct and protect myself from the possibility of interest rates going up--remember, they are currently at some of the lowest rates ever). That way only my last year of loans would be on the new variable interest rate consolidation loan plan, but the bulk of my loans would be in a fixed consolidation loan with Direct and would never exceed the 2.85% (I think ??? that's the rate after rounding up from 2.77%). Also, I was told that I could still use the 0.25% electronic payment reduction with Direct as long as it is offered and keep my rate down around 2.6%. In my eyes, the benefits were worth the risk of chancing that interest rates go down (I'm guessing they will go up if they go anywhere).

One other thing that I did since I consolidated while still in school is fill out an economic hardship deferment, which allows me not to have to pay a dime at present. That's right...my loans are consolidated while I am in school and I have not had to pay one nickel on them. Also, I was told there is no interest charged on the portion of my subsidized loans, just as if I had not done anything.

I am covered under my current economic hardship for one year unless I loose my eligibility for example by coming into a lot more income, which for me means no payments for a year (I will have graduated and reconsolidated by then). If I was still going to be in school after my current economic hardship deferment ends, I would have to reapply (new form required after one year), which I was told was simply a formality to make sure that I still meet the requirements. As long as I don't make over a certain amount of income each year and meet the other requirements for economic hardship deferment, I was told that I can continue to qualify for an economic hardship deferment. I think there is a max of 36 months of economic hardship, so that is something to keep in consideration. If it is something you want to consider, you should check Direct's website for their latest information: http://www.dlssonline.com/defer/defer-req.asp?DeferId=eh .

At present, the interest rate and consolidation rules look like they will not have changed since I consolidated with Direct in '04, so I will be shopping around in the next few months to reconsolidate and lock in the 1.6% (I think that's the rate one may be able to get after electronic payment and on-time payment reductions). It was nice for me to be able to do that and to have had the peace of mind that came with the course of action that I took.

You may want to check with a proper professional to see if consolidating while you are still in school makes sense in your situation. It should be noted that I am not a financial advisor, and I am in no way a professional advisor of any sort (CPA, attorney, Financial planner, etc.). Each individual may have a different set of circumstances, so the information I provide may not apply to you at all. Remember, the information in my post is just what I have learned doing my own research; it is most definitely not gospel, and you should check with the appropriate people prior to doing anything. Furthermore, the information in this post may contain errors or omissions, so consult with a professional before taking any action whatsoever.

Good luck!