The requirements from my understanding to consolidate student loans is to be in grace of repayment status. I am currently taking classes and will not actually finish until December 2005. By that time I expect rates to be a bit higher then the current rates (.75 - 1.00 higher). Has anyone tried to consolidate while still in school?

My understanding is that after each add/drop period the schools notify the lenders of your status (part-time, full-time, etc). If you drop below half time your loans go into grace period, thus allowing one to consolidate the loans. I personally do not want to add a semester longer if I can manage around this. I have read once that if someone drops below half-time (ie. withdraws from a class) it is the STUDENT'S responsbility to notify the lender immediately. I was considering doing this to cause my loans to enter a grace period so that they could be consolidated. Anyone have any thoughts on this?

I know this is opposite of what most want, defer as long as possible. However, I figure that rates will be higher next year (based on 91 treasury rate) and it would save a lot of money to consolidate at this low rate.

thanks

I also plan to try something in May. I will be in grad school for a few more years, but I want to lock in the rates before they go up.

I'm hoping that if I don't take any courses over the summer, and don't submit the full time summer certification form, then I will not be considered enrolled in the summer.

Here's the good point. If you succeed and then go back to school, the subsidized portion of the consolidation loan will still be deferred (at least the interest). This is probably the reason they don't want you to consolidate while in school, because it leaves them holding a loan that doesn't make them money.

GBWisc

I am familiar with that thread and have read over the postings. My question was a bit different and not usual, that is why i started a different thread. The thread was regarding deals in regards to consolidation.

My thread is figuring out how to consolidate if you are not technically eligible due to "in-school" status.

johnmagee4

I have read the statues regarding the school status, grace period, etc.. There is something called a bridge extension (or something like that) that exists so that if you don't take classes in the summer it won't make your loans go into grace period. This bridge extension exists for any school that does not require one to take summer classes.

Maybe my post was not clear in what I am trying to do. The rules state you can not consolidate a student loan until your loans are in grace period or repayment. To be in grace period you must have graduated, dropped below half-time enrollment, or withdrawn (period). Thus calling the lenders will not help because they will all just keep telling you the loans must be in grace and you must either have graduated, dropped below half time status, or withdrawn. What I am looking for is a way around this. I "think" if someone calls up the lenders after drop/add period is over and tells the lender they have withdrawn from school or dropped below half-time status they will take the borrowers word for it and place the loans into grace period, thus making consolidation possible.

My plan is to call the lenders I have and try this, i was hoping someone had thoughts or knew of someone who did do this.

my understanding is that when you consolidate a loan, you give up all the ability to defer the loan and interest on it even if you go back to school? it might make sense i supposed on private school loans that have accruing interest while in school

I found out the way I was planning on locking in the rates will work. I got it accomplished! Even if you are still in school, if you call your lender and tell them you withdrew from school they will place the loan immediately into grace period. Then you can consolidate to lock in the rate. This part I now have done. I figure come the spring I can then have the loans deferred because I will be back in school. So anyone with loans and not going to graduate prior to this summer, this is an option to consider. Granted you will lose the subsidy and interest will accrue, but it is well worth it if you believe rates will be higher. You can wait until April/May period to see where rates are to decide. But this is an option to play a loophole, not break any laws!

Actually rates change on july 1 based on the 91 day treasury yield at the end of may. If you go back to my original post it was with the belief that rates will be higher come the end of may. If you listen to what the fed has been saying, you can almost count on it. If the fed raises rates 2 more time before may, that would push the fed funds rate to 2%, and the 91 treasury will be something higher then that. student loan rates are 91 treasury + 1.7%, therefore they would have to be somewhere between 3.7-4%.

I started this thread because I had never heard of consolidating student loans while in school, but with interest rates where they stand I thought it was something to explore and find out if it could be done. Nobody had an answer on here, I found the answer and have provided an avenue for those who might want to consider it.

Most students want to defer student loan repayment as long as possible, I looked at it and said rates are so low I would be happy to lock them in at this rate, even giving up 12 months of the interest subsidy and getting 20 years at 1.6%. Prior to the fed dropping interest rates substantially a few years ago, student loan interest rates were generous only from the point they were capped at 8.25%. Prior to sometime around 2000-2001, stafford loans had never been below 7%! Also prior to the last few years these generous discounts they are offering with interest rate reductions didn't exist. Oh, there is also talk on congress changing the method of computing the interest rates because of how low the current rate is on student loans. Who knows what will happen, I am just happy to have a guaranteed fixed rate that is an absolute joke and will extend repayment (and accrue interest) as long as possible.

Have to have already graduated to consolidate. cannot do so while in school.

jcohen73 said:My first suggestion would be to ignore billkong since he apparently didn't read this thread, because it is possible! My second piece of advise is this.. You can withdraw from a semester and go back the following semester and be eligible for student loans. It might be wise to use another lender just to have various lenders to give yourself options as to who to consolidate the future loans with. You do not need to tell the lender your back in school, the school automatically sends information to the lenders saying you are eligible

Lying to a lender to tell them you withdrew from school isn't particularly honest. I wouldn't want to expose myself to any potential liability due to lying to my lender about my school status.

Giving up the subsidized interest is fine for me. I look at the bigger picture. I have consolidated my loan into a 20 year loan at the moment. I will probably still take classes for another year, so I gave up a year of no interest. My rate starts out at 2.6%, so I pay an EXTRA year at the 2.6% since I consolidated. I am locked in at the rate for 20 years, plus after year 3 the rate is 1.6% (years 4-20). Now I COULD gamble and not have locked in the rate and had an extra year of no interest. If the 90 day treasury rate stays exactly where it is now (unlikley giving the fed has clearly stated they will keep increasing) the rate will be about 4%. So it is pretty simple to give up 2.6% in interest now, for a rate that will be at least 1.4% less for 20 years.

I have graduated payments as well, 5 years interest only. I also plan every 4 years to "sign up" for 2 classes, take a few hundred dollar loan, and then reconsolidate again. My goal is to stretch out paying this back as long as possible.