Loan Consolidation for Medical Students

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Link to MSU consolidation information

Please review all information when considering whether consolidation is right for you, since you may lose special borrower benefits by consolidating. Contact the medical student advisory staff for help understanding your options.

What is consolidation?

It's refinancing just one loan or the combining of all of your eligible federal student loans into one new loan with a fixed interest rate. The consolidation interest rate is based on the weighted average of the borrower's underlying loans rounded up to the nearest one-eight of a percentage point.

Note: Private educational loans cannot be consolidated with your federal student loans.

Should you consolidate?

You may have already consolidated some of your federal student loans, but if you are considering additional consolidations, be advised, the dynamics surrounding loan consolidation have changed. Consolidation can be a complex issue with both advantages and disadvantages. You need to carefully review your situation before taking action to consolidate.

Effects of consolidation in today’s environment

• Possible forfeiture of borrower benefits – benefits vary with lender
  
  Note: Students who borrowed through the Michigan State University Michigan Students First (MSF) program from Fall 2003 through Spring 2008 should know:
  1. You already have one of the lowest rates possible.  If you make your payments on-time, your interest rate will fall to 0% (ZERO!) after 36 payments and remain at 0% for the rest of your repayment period.
  2. You will lose the zero interest rate if you consolidate your MSF loans.
  3. You do not have to consolidate to negotiate lower monthly payments.  You can request a repayment schedule other than the standard 10 year plan from MSF’s servicer, Great Lakes Loan Servicing, to help lower your monthly payment amount.
• Rounding may result in a higher interest rate
• Longer term = increased interest costs
• May negatively affect grace, deferment, or forgiveness options

When to consider federal loan consolidation

• To secure a fixed rate of interest on variable rate loans (Stafford loans disbursed before 7/1/06) especially when rates are low
• To bring multiple loans to one loan service
• To obtain Public Service Loan Forgiveness (loans must be with Direct Lending)
• To make Perkins or Loans for Disadvantaged Students eligible for the Income Based Repayment (IBR) plan

How can I consolidate my loans if I decide that is the best option for me?

Direct Loan Consolidation, through the Federal Direct Student Loan (FDSL) Program, is available "directly" from the federal government. You can apply at www.loanconsolidation.ed.gov