Consolidating Loans - How To Approach

[MissCrabette]

Holy cow, you guys! Eight percent??? Wow! I consolidated back in 2005 at some rate I don't remember, but it went down just like Heidi said. It's now 1.625%.

This sucks. I'm sorry.

[oceanchild]

My question is the following: Would you go for Graduated Repayment (ups the monthly amount every 2 years), Extended Repayment (forgiven debt after 25 years if still owing), or Income Based Repayment? My gut says to stay away from IBR, only because the government will see "all the money we roll in" (*cough snort*), and tell us we can afford it. Dude, we can't.
Obviously, you are going to pay more interest with GR and ER, but the monthly payment amount is what's killing us. It's only going to increase next month (hold me!).

I don't know about the other options, but here's what I can tell you about IBR:

1) It has a 25-year forgiveness period too (10 if your employer is nonprofit/government).
2) This website has a calculator that can estimate your monthly IBR payments: http://www.ibrinfo.org

Good luck. DH's debt load is enormous, at a pretty high interest rate, and we are doing IBR in hopes of qualifying for public service loan forgiveness.

[MDPhDWife]

I don't know about the other options, but here's what I can tell you about IBR:

1) It has a 25-year forgiveness period too (10 if your employer is nonprofit/government).
2) This website has a calculator that can estimate your monthly IBR payments: http://www.ibrinfo.org

Good luck. DH's debt load is enormous, at a pretty high interest rate, and we are doing IBR in hopes of qualifying for public service loan forgiveness.

Julia, have you guys looked into the new special consolidation? I've been getting emails about it since ALL we have are fed loans, but I've been a little hesitant because I'm not clear on what if any drawbacks are to it.

Also not all servicers participate in the 10 year loan forgiveness program even if they do participate in IBR. We are on IBR for all our loans but the local servicer here doesn't do the PSLF program, but they DO have a physicians in NM plan that has a ridiculously low interest rate if you practice here.

[Thirteen]

The PSLF mentions "public health" as a listing... are you hoping to qualify your DH through this category? JW.

[oceanchild]

Honestly, DH is in charge of this stuff, and I don't know much more about it than what I posted. The theory is that academic hospitals are generally nonprofit organizations, and for residency/fellowship (6 of the 10 years) he is a state employee. And even if that doesn't pan out, we'll still have the 25-year forgiveness. But he's pretty confident it'll pan out.

[SuzySunshine]

Honestly, DH is in charge of this stuff, and I don't know much more about it than what I posted. The theory is that academic hospitals are generally nonprofit organizations, and for residency/fellowship (6 of the 10 years) he is a state employee. And even if that doesn't pan out, we'll still have the 25-year forgiveness. But he's pretty confident it'll pan out.

I would be very careful about this. While it is true most hospitals are non-profit (academic or not) there is usually a separate arm that pays the docs, I'm not saying that is or isn't a non-profit but I could see how that could get tricky.

And if you're paying more then prime plus 3% (which right now I think is 6.25 total) I would look into a physician loan. The one we just got is 6.25% and we were approved for a ridiculous amount of money before they even saw DH's new contract. It was based PURELY on the fact that he's a doc and what his specialty it.

[oceanchild]

I would be very careful about this. While it is true most hospitals are non-profit (academic or not) there is usually a separate arm that pays the docs, I'm not saying that is or isn't a non-profit but I could see how that could get tricky.

Totally agree. We'll see what happens. At least we're still making payments, regardless.

[Thirteen]

Whew! Okay, so his rate is 5%, not 8.25%. THANK.GOD.

[MDPhDWife]

And if you're paying more then prime plus 3% (which right now I think is 6.25 total) I would look into a physician loan. The one we just got is 6.25% and we were approved for a ridiculous amount of money before they even saw DH's new contract. It was based PURELY on the fact that he's a doc and what his specialty it.

But if we pay off the student loans with a physician loan then there's no special incentives or loan forgiveness options right? And heaven forbid if he should die, the physician loan would still come out of the estate where as the student loan dies with him? Is my understanding accurate?

[SuzySunshine]

Yeh, hadn't thought of that - probably not a good idea but that interest rate would just kill me!

[scarlett09]

I found some info about who qualifies for one of 'dem fancy consolidation loans that the Obama administration wants to give out: http://studentaid.ed.gov/PORTALSWebA...solidation.jsp.

The one piece I do remember from having read this stuff more closely late last year is that your private loan servicer will contact you if you qualify for the consolidation loan. It isn't something you can just apply for, you have to wait for the golden ticket from the jackasses that take most of your money every month. :eyeroll: Oh, and 8.25% is the MAX that your interest rate can be with this consolidation.

Can you tell that my payments (thankfully lowered by IBR) start up again this month, lol!

Here's a way to figure out what kind of interest rate you might see by consolidating: http://loanconsolidation.ed.gov/help/rate.html

I consolidated my undergrad stuff in 2005 at around 5%; I could have had right around 3% had I understood the paperwork they sent me was something I need to sign and return ASAP. :facepalm: I haven't started on consolidating grad school loans yet, and I've got no idea what to do about DH's (3 private held by SM, 1 federal serviced by SM, and 1 med-school held one). Right now we're just trying to tread water on making payments until we get a little more settled post-training. But I think DH might be eligible for PSLF...hmmmm...now to convince him to stay put for 10 years, hahahaha!!! Here's the recently updated PSLF info: http://studentaid.ed.gov/students/at...2020120130.pdf

[JDAZ11]

Thank you!

[Finding Equanimity]

Ugh, you guys are making me sick to my stomach. I have 2 loans (from law school) at 8.5% and there is no. way. I can pay them. (I'm in forbearance). It's about $800/month EACH. And we have 2 kids and no money. I will look at the link scarlett posted, but I know for sure I haven't gotten any "golden ticket" calls. Ugh.

[MissCrabette]

This isn't about loan consolidation, but it's sort of related, so I thought I'd share. http://www.hhs.gov/news/press/2012pr...20120213a.html The press release says it's for students in their last year, but I went to the website and couldn't find any mention of it. Maybe I didn't look hard enough.

[Finding Equanimity]

I called that number scarlett mentioned, and sure enough, I qualify for the special consolidation. They say I'm "slated" to receive a call, but it could be any time between now and June. Seriously? So every day my loans keep increasing in size, and I just have to wait until they get to me? I am very happy that I qualify, but still, I can't believe they have set up such an inefficient system. I was on the phone, ready and willing to do what it takes to consolidate!