What to do with undergraduate loans?

[solefolia]

I've always been pretty clued in about financing my education while in undergrad, but grad school is a whole other ballgame and I haven't been able to find any concrete information. Hoping you guys can help.

I have a "decent" amount in both undergraduate federal loans and private loans (rough estimate of about $20k each; federal is mostly sub. stafford, some perkins). In graduate school, I anticipate attending an institution that has a tuition waiver and a stipend that is enough to live on and with extra to pay down my loan amounts. I realize things can change and I might not get in at all, but I would like to be better informed, since I am least prepared for this situation. Here are my questions:

1. Are federal loans acquired during undergrad deferred during graduate school? If so, does my subsidized stafford loan remain subsidized?

2. Are private loans acquired during undergrad deferred during graduate school? Or does it depend on who I got the loan through?

3. How does consolidation work? Is it always separated by federal and private loans (that is, only federal loans can be consolidated together, and private loans consolidated together)? Can you defer a consolidated loan?

4. Is it a good idea to consolidate when starting graduate school? Or am I better off paying down private loans and keeping my interest-subsidized loans deferred?

5. What course of action did you choose for your loans while in graduate school? What do you recommend in my situation?

Any help or advice you guys can give me is greatly appreciated!

[jennesy]

I can't answer all of your questions but YES, most loans are deferred during grad school. I believe that the loan will remain subsidized.

[t_ruth]

I'm guessing that deferral of private loans will depend on the lending institution, right?

Does anyone have a good phone number to call for these same questions? I consolidated my loans when I graduated in 2003 and definitely want to keep my awesome rate I also seem to remember reading somewhere that married persons' loans are considered together and was curious if that meant they would both be deferred while one is in school...(wishful thinking perhaps)

[belevitt]

I am in roughly the same spot that you are. I have around 50K in student loans with 35K or so in private loans. Fortunately, I also have a wife who is a financial aid counselor at a college. My understanding of the situation is this -

1. You can choose to put your loans in forbearance (short term) or deferment (long term) if you cannot afford them

2. Subsidized federal loans will not draw interest during deferment but private loans will

3. Loan consolidations have gone the way of one dollar a gallon gas, no lending institutions still do consolidations, only the dept of ed still does. Needless to say, you can't get borrower benefits any more on consolidations. And at no point would it have been prudent to consolidate federal loans with private ones.

4. If you have Great Lakes servicing your loans (most people do) you can choose multiple different repayment plans including one that allows for three different monthly minimums spread over something like 28 years. If you are going to graduate school, this might be a good plan and you can always pay it off more quickly if you ever make more money.

[LockeOak]

Yes, federal student loans can be deferred during grad school (it's NOT automatic of course, you have to do a little bit of paperwork). If they're subsidized they will not generate interest while they're in deferment. Private loans I'm guessing will depend on the lender. I didn't consolidate mine. I have ~$20k in undergraduate loans, mostly subsidized Stafford loans handled by Sallie Mae. They're at a 3.61% interest rate, but again most are not generating interest right now. My strategy has been just to pay $50 a month into my loans, which eats up the interest and a little bit into the principal. Definitely pay enough to cover the interest if you can, any money spent on student loan interest payments is tax deductable.

[juilletmercredi]

I'd like to add to the emphasis that deferment on loans from undergrad is NOT automatic. You have to contact your lender and inform them that you are in graduate school, and usually, they require some sort of proof like a transcript or a special letter from your new school's registrar's office. However, federal loans can most certainly be deferred during graduate school, and your subsidized loan will remain subsidized -- you don't accrue interest until you are out of school after the six-month grace period.

Private loans all depend on the lender, but most private lenders will grant you a deferral if you are still in school.

This website talks about loan consolidation: http://www.loanconsolidation.ed.gov/bor ... nsol.shtml

Consolidation seems most helpful if you have loans from a lot of different lenders, each with a minimum, and you can't keep up with your monthly payments. The consolidation will combine them all together under one interest rate and lower your monthly payment to one base pay. However, consolidating your loans also extends your repayment period, which means you will pay more interest in the long run. You also can't consolidate loans that are in in-school status, which means you probably are not eligible to consolidate anyway. You also cannot consolidate federal and private loans together. If you're going to be in school it's not in your best interests to consolidate your loans.

You can defer consolidated loans, if you qualify for "renewed deferment benefits," which basically means that a consolidation loan may restart the clock on your deferments.

I think that while married persons' loans were once considered 'together,' they're not anymore. So just because your spouse is in school does not mean your loans will be deferred, and vice versa.

My loans are deferred. I only had about $9,000 in Stafford loans from undergrad, all unsubsidized. They accrued interest while I am in school and are continuing to accrue interest now. I have some credit card debt that I need to attend to before I worry about that interest, so right now I think the re-capitalized principal on my loan balance is actually a little over $10,000. As soon as I start getting a chance, I will begin paying down that interest. I also had to borrow some money this year for graduate school (relocation expenses), which came out to $8,500. This loan is subsidized, though.