In School Loan Consolidation
Dear Betsy,
I am a little confused about this whole in-school loan consolidation that I have been hearing about so much. I didn’t take out any loans for undergrad, so this is my first time actually dealing with this stuff. I am about to begin my 2nd year of medical school and I have been told by my financial aid office that it is within my best interest to consolidate my loans that I took out last year and the ones that I have been granted for the coming year. I understand that by consolidating my loans now, I will lose my grace period. Would there be any other way to defer payment of the loans when I graduate? Also, if I consolidate my loans now, do the loans that I take out for next year (and the year after) also get consolidated with the fixed interest rate, or will they be under whatever the new interest rate is at the time?
Thank you,
Josephine Kweku
Dear Josephine,
No worries—everybody’s a little confused with all that’s going on with consolidation! To answer your questions, yes, there are other things you may be able to do to defer payments when you finish school such as deferments and forbearances—as well as some lower payment options that would allow you to perhaps pay interest only during that time. Just talk to your lender some months prior to graduation to see what will work best for you.
The loans you take out after consolidation will be under whatever the interest rate is at the time. They will be variable and eligible for consolidation but you will need to do a whole new transaction.
Hope that helps,
Betsy
