Post # 1
I have a LOT of student loans…I’m taking upwards of 125,00-150,000 from medical school. There were in deferment for 3 years but that time has lapsed and it is now time to start repayment. I know people sometimes choose to consolidate but that might not be my best interest interest wise. I know I have an income based repayment option but want to know what everyone thinks is the best way to approach repayment….I don’t want them to screw me into an option that isn’t best for me?
Any advice from high student loan bees out there such as doctors, lawyers, doctorates??
Post # 3
@Lily_of_the_valley: I consolidated my undergrad loans way back in the day. I only had $13k but they were not in lump form. I used Nelnet to consolidate them and I got a fixed rate and one payment.
I would recommend consolidating if your rates are variable and can fluxuate, and fixing them will get you a fixed rate.
Never consolidate with anyone else (spouse, etc).
Post # 4
@Lily_of_the_valley: Shop around – I went through FedLoan Servicing, but I know NelNet is another one.
The way it works is that you apply with these groups (FedLoan, NelNet) to consolidate your loans, they will look at all your existing loan servicers and basically pay back your loans to those servicers. Then you will owe the consolidated balance as one amount to either FedLoan or Nelnet or whatever you choose.
One thing I paid attention to when picking out my consolidator group was if they had a prepayment penalty. I plan to start making big payments on my loans this year, so I didn’t want that to bite me.
Post # 5
@Lily_of_the_valley: I don’t know how it is outside Canada, but I used to work for a bank here and we never recommended consolidating student loans for a few reasons
1. interest on SL’s in Canada is tax deductable, it’s not on normal loans
2. if you were to lose your job/be unable to work, you can get relief from student loans with greater ease than with a regular loan
3. greater payment flexiblity with student loan terms than regular loans
Post # 6
@MsGinkgo: I use Nelnet as well. I like that I have a fixed rate and so my payments are the same everytime.
Post # 7
@Lily_of_the_valley: I wish I could – I have lots of private loans in addition to my federal ones! Good luck!
Post # 8
@Lily_of_the_valley: Consolidation can actually be a really good idea for people in your position. I worked for the DOE and helped people through this process many times. You would get income contingent payment options, your interest rate would be the average of all of your current rates (which could be beneficial depending on balance size per disbursement). Also, after 20 years of making your payments, you would claim the remaining amount as income on your taxes.
Post # 9
@Lily_of_the_valley: Federal or personal? I know my federal student loans consolidated themselves and I pay Great Lakes. For federal loans you also have to complete a “training session” where they describe your different repayment options.
Post # 10
Do you have all federal loans or are they private?
I don’t have a doctorate or anything but here’s my 2 cents… I consolidated my federal loans. I had some from grad school and some from undergrad. My grad school loans had a higher rate than my undergrad ones so I consolidated them separately. You can fill out a form on the Direct Loans website to do that, you don’t have to put them all together and do all the interest rate averaging. Once I consolidated, Direct Loans transferred all my loans to the same servicer so I only have to go to one site to make all my payments and get info about my accounts. I’m really happy I did it.
Post # 11
Good point, you want a service that doesn’t penalize prepayments or overpayments!
Sometimes if you want to pay more on the princpal, you need to pay the extra amount separately by check and include in writing that you want it to be applied to the principal. So ask about that too.
Post # 12
@TeeBee25: All federal loans, Perkins loans and Sally Mae. Subsidized and unsubsidized
Post # 13
@Lily_of_the_valley: Personally I wouldn’t consolidate for a few reasons…
If they have different interest rates then you are essentially assigning a higher interest rate to the lower amount of money.
Plus if they are in separate loans then you can pay the minimum on all but one and work to pay them off as fast as you can one at a time…. so as you go along – your monthly commitment goes down. Otherwise your stuck with that high payment for the life of ALL of the debt. So as time goes by you eliminate risk as you pay off each loan. You pay more when you can but you arent’ forced to.
I have 109k split up between 5 different loans and theres zero benefit to consolidating. All it does is put the higher interest rate on a larger loan thus costing me more interest. Basically its just putting it all in one lump some payment. I just have them all on auto debit anyway so it really makes no difference.
Your goal should be to pay them off as soon as you can. make a budget and set it up to pay the lowest payment on the highest loan and a higher payment on the lower loan and keep your focus on one at a time. Over a hundred grand at once makes it feel like a hopeless battle.