Student Loans

[alicias1098]

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How do you guys handle your student loans during residency? Obviously, the deferment periods would be ending. A residents salary isn't exactly one that allows you to pay back thousands.

-Alicia

 

[Blade28]

(1) Usually the monthly payments aren't THAT much!
(2) Some loans allow you to defer until after residency.

 

[NinerNiner999]

Consolidate and consolidate now. Do not pass go and do not collect $200. Rates have increased 7 times this year and the government rate on loans will only stay intact until this July. You will be able to put your consolidated loans on deferment during residency for three years and if you can't because you make too much, put them on forbearance. The capitalized interest will only accumulate at the rate you lock in, and will still be much cheaper in the long run! Think about it - if you consoliate to a payment of $500 per month for 30 years, in 10 years $500 will be like $200 in today's money.

Consolidate and defer - don't miss the lowest rates in history...

 

[Blade28]

I plan to consolidate right after I graduate in mid-May.

 

[Koko]

Consolidate and consolidate now. Do not pass go and do not collect $200. Rates have increased 7 times this year and the government rate on loans will only stay intact until this July. You will be able to put your consolidated loans on deferment during residency for three years and if you can't because you make too much, put them on forbearance. The capitalized interest will only accumulate at the rate you lock in, and will still be much cheaper in the long run! Think about it - if you consoliate to a payment of $500 per month for 30 years, in 10 years $500 will be like $200 in today's money.

Consolidate and defer - don't miss the lowest rates in history...

Any downside to consolidating now?

Are there good sources of info on this to reaearch - it's not an area I know much about and I don't have much confidence in my fin aid people.

 

[AJM]

Any downside to consolidating now?

Are there good sources of info on this to reaearch - it's not an area I know much about and I don't have much confidence in my fin aid people.

The only downside that I know of in consolidating early is that all interest from the moment you consolidate becomes capitalized - ie your interest is added on to your principle. The other downside is that you lose your grace period, and have to start repayment immediately after graduation, rather than getting to wait 6 months (like with the Stafford loans).

It sounds like interest rates will be going way up in July, so you should probably consolidate before then if you're planning on it. I believe they only change the interest rates for consolidation once a year (~July), so if you want to lock in the lower rate you should do it soon. BTW - I could be wrong about this last part - it's been a few years since I consolidated.

 

[NinerNiner999]

Any downside to consolidating now?

Are there good sources of info on this to reaearch - it's not an area I know much about and I don't have much confidence in my fin aid people.

Contact your lender and find out what your consolidation rate will be ASAP. Some lenders allow you to keep your grace period for six months after you consolidate, which is a plus. If all of your federal loans are from the same lender, you are required to consolidate with that lender only. If you have more than one lender, shop around. Don't worry about capitalization. Most incentive programs include things such as 1% principle reduction, .25 or .5% rate reduction with automatic bank payment, and 1-2% rate reduction after 48 consecutive payments. Time is short and you don't want to miss the boat on this one.

 

[skeezix]

You can't consolidate now, if you still have one more year of loans to take, can you? (as an MS3)?

 

[PassinGas]

Depending on your situation, you should be able to consolidate while still in school. You can go with Direct (the federal government), which is the only lender that I know of that you can consolidate with while in school. I did it, and it has worked out well. I just had to make sure that I took out some "regular loans" during my last year of med school so that I would be able to reconsolidate after I graduate (If I hadn't taken out any additional loans after I consolidated the bulk of my student loans with Direct, then I would be stuck with Direct & unable to shop around after I graduate). Since I still had loans to take out this year with my current lender as a 4th year med student, I now have two lenders (Direct & my original lender which I took out loans with again this year). With two lenders, I will be able to shop around after I graduate to find the best possible deal on a consolidation loan that will include my Direct consolidation loan & my 4th year loans. If the government chooses to make future consolidation loans have variable interest rates, one could choose to keep the consolidation loan that they made now with Direct and not reconsolidate their latest loans with the Direct consolidation loan that they would already have. That way after graduation, there could be two consolidation loans--One consolidation loan with the bulk of one's med school loans locked into a fixed interest rate Direct consolidation loan made under present interest rate rules and a second variable interest rate consolidation loan (if one wants to consolidate under variable rates) that only contains the last little bit of loans used for med school. Remember, I'm not a financial expert, so be sure to talk with Direct or another professional about your particular situation. You can also check out your financial aid office, but keep in mind that they normally follow the "regular" path of most med students and may not consider the approach that I took since most med students don't utilize it.

 

[spikyhairedgirl]

The other downside is that you lose your grace period, and have to start repayment immediately after graduation, rather than getting to wait 6 months (like with the Stafford loans).

Actually, if you consolidate with Direct Loans before you graduate, you still maintain your 6 mo grace period. Private lenders are a different story.
Also, if you can afford to pay just the interest payments during your economic hardship deferrment period, you can avoid a significant amount of capitalization.