Can You Consolidate Your Student Loans And Later Defer Them If You Go Back To School?
The question really has a number of nuances to it. Let us break it up as much as we can. Firstly, let us look into consolidation. Can you consolidate your loans? Ofcourse you can, just be smart about the timing on your consolidation. Look carefully into the reasons for consolidating, weigh the effects of your loan consolidation on your credit score and decide if loan consolidation makes sense.
As far as deferment is concerned, yes both subsidized loans and unsubsidized loans can be deferred. Subsidized loans such as Stafford loan or Perkins loan can be deferred with the government bearing the interest payments during the deferment period. In the case of unsubsidized loans such as the PLUS loans and private student loans from banks and other financial institutions, the interest on the loan is accrued and will add to your student loan amount.
Deferment of loans again is on a case by case basis. Can I defer my loans if I go back to school? Yes, you can but they are certain restrictions. You can defer your loans only if you decide to go back to school on a more than half time basis. Once your loans are deferred then your payments stop for the period of deferment. Do ensure you maintain your school status. You cannot be taking a break from school or skipping a semester or your loan deferment will end.
So if you are considering consolidating your loans and then deferring them while you go back to school, do ensure that you firstly shop around for the best loan consolidating option and ensure you understand and meet any restrictions or clauses there might be to defer your loan.
I’m listing some of the questions we get on this subject below. All personal information has been removed.
- “Can I consolidate my loans and defer them if I enroll in a part time course?”
- “I am thinking of going back to school but I need to stop my loan payments while I’m at school. Is deferment an option for me?”
- “Can I consolidate my stafford loan if I go back to school?”
- “Can my stop payments on my federal loan when I’m back in school?”
- “I want to consolidate my loans with Sallie Mae or another private direct loans to lower my payments. Do I still have the option for deferment for lack of income or going back to school?”
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Yes you can defer the consolidated loans while you attend colleges at least half time. You would not be require to pay the student loan monthly payments while you are still in school, because you would be considered as having " in school status". Once you drop below half time status or decide to take a semester off, you will be required to pay the monthly payments.
YES.
Yes, the various deferment options are still available even if you have consolidated your Stafford and/or Perkins loans.
Here’s a little known fact: The government is still able to track which parts of your consolidation loan are made up of subsidized loans and which parts are unsubsidized. Even if you consolidate, any part of the consolidation loan that used to be a SUBsidized Stafford loan will become subsidized when you enter an approved deferment period. So, if you go back to school the part of your Federal Consolidation Loan that used to be a Federal Subsidized Stafford Loan will stop accruing interest. Neat, huh? (For proof, see page of this form: http://ifap.ed.gov/dpcletters/attachments/FP0606SCH.pdf)
[If you log on to http://www.nslds.ed.gov, you can view your loan history (or have your school do it for you) and see how much of your consolidation loan is Sub Stafford and how much is Unsub. Stafford.]
Note of caution: while the deferment options are nicely retained during consolidation, forgiveness options are forfeited. If you think you might be eligible (for example) for a Perkins loan teacher forgiveness, don’t consolidate that loan. If you do, you will not be able to regain that benefit.