From Our Forums: Consolidation Question Quartet! | 04.27.10

Posted in Consolidation, Loan Consolidation By Student Loan Network Staff

There was a great question in our loan consolidation forum this week from a new user with lots of loans from medical school. James recently finished his Master’s degree as a physician assistant (congratulations!) and wrote to us looking for some consolidation advice:

I have the following types of federal loans:

  1. Subsidized Stafford
  2. Unsubsidized Stafford
  3. Grad PLUS
  4. Previously consolidated federal loans from my Bachelor’s in Nursing (’97-’01)

My questions are as follows:

  1. Can I consolidate the above 4 types of loans together?
  2. When should I consolidate? Before or after July 1st? Does it matter? (Grad school was from 8/07 – 12/09)
  3. Who can consolidate? Are there any options now other then the federal government? Will there be lower interest options in the future?
  4. I’ve read about the PLUS loan loophole. Should I consolidate my PLUS loans separately to save 0.25%?

Question 1: Can I Consolidate the 4 types of loans together?

Absolutely, through the Direct Loan Consolidation Program. Since the loans described are all federal student loan products, you can opt to consolidate them together through the Department of Education.

Question 2: When should I consolidate?

This question could go a number of different ways. Due to the fact that he finished school in December 2009, he is now almost 5 months into his grace period (6 months total) before his student loans enter repayment. Consolidation can take anywhere up to 45 days to complete (though usually is less), so logic would dictate that he should start the process soon.

I recommended that he begin his loan consolidation in early-mid May to take advantage of the grace period as long as possible. As soon as the consolidation is completed, the new loan immediately goes into repayment‚Ķ so if you have time left that you don’t need to be making payments, take advantage of it and make a savings account or use the money elsewhere.

Question 3: Who can consolidate?

At this time, the only entity that is authorized to perform federal loan consolidations is the Department of Education’s Direct Loan Program. In the past, other banks and institutions were allowed to do this, but regulations and reform ended the practice.

As far as lower interest options in the future‚Ķ who’s to say? My professional opinion is biased toward a yes answer due to the aggressive legislation happening in Congress, but the next question would be “when?”. As the popular adage goes, “Hindsight is 20/20.” My best recommendation is to take advantage of what is available on the market now and create a solid plan for paying down your debt.

Question 4: Consolidate PLUS loans separately?

This really depends on how many of them you have and if your PLUS loan debt is significantly higher than your Stafford/Perkins debt. If yes, then it might be a good idea to keep them separate and therefore not drastically increase the interest that would be paid on your other, lower interest loans. That being said, the point of a consolidation is to cut your bills down to one and make payments more affordable, isn’t it?

Keep in mind that when the interest rate is calculated for your consolidation, it is taken based on a weighted average of your current loan interest rates, not to exceed 8.25%. If the PLUS loans make up the highest debt volume, it might make sense to keep them separate.

Was this helpful for you? Let us know in the comments!

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5 Responses to “From Our Forums: Consolidation Question Quartet!”

  1. Kyle says on January 19, 2011 at 12:01 am:

    Interesting blog, as I have been a Physician Assistant for 10 plus years, and a follow up question. Can all or part of your Federal Sudent Loans be elligible for forebearance if you work in a Federally recognized medically underserved area/city?

    Reply To This Comment
    • Student Loan Guru says on January 19, 2011 at 12:09 pm:

      @Kyle- Hi Kyle. Your loans *might* be eligible for forbearance but I am not positive. You must apply in writing to the school that made your loan or to the agency the school employs to service your loan. You should be able to find out that information at OR at You’ll have to provide documentation to show why you should be granted forbearance. You must continue making scheduled payments until you’re notified that deferment or forbearance has been granted, if it is. Otherwise, you could become delinquent or go into default.

      Now, one program I am aware of is repayment assistance (again, not a cancellation) available through the U.S. Department of Health and Human Services’ Nursing Education Loan Repayment Program (NELRP). This often applies for medical technicians as well, but maybe it would work for a PA.

      Generally, I hear of medical students in residency being granted the forbearances because once the loan payments kick in the student is not making enough money and qualifies for the economic hardship deferment. If you’ve been working for 10 years, it’s unlikely you’d be eligible in that area. Good luck!

      Reply To This Comment
  2. Victoria says on November 19, 2010 at 12:08 pm:

    Great post! I have an aditional question: in a case where most of my federal loans are about 50% stafford (at 6.8%) and 50% grad plus (at 8.5%) do you advice that I put them together as part of one consolidation? or should I consider separate consolidations?

    Reply To This Comment
  3. MarkSpizer says on May 2, 2010 at 6:38 am:

    great post as usual!

    Reply To This Comment
  4. student loan says on April 28, 2010 at 1:41 am:

    My cousin recommended this blog and she was totally right keep up the fantastic work!

    Reply To This Comment

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