Paying for a loan with a loan

Discuss various money matters here. Loans (federal and private), scholarships, lottery winnings, or other school finance related information and queries.
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drmguy
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Paying for a loan with a loan

Postby drmguy » Tue Apr 05, 2011 1:50 pm

So I have ~7,000 in private undergrad loans and they do not have deferred interest. Should and could I pay that off with federal loans so I don't accrue interest while in school?

bhan87
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Re: Paying for a loan with a loan

Postby bhan87 » Tue Apr 05, 2011 1:53 pm

drmguy wrote:So I have ~7,000 in private undergrad loans and they do not have deferred interest. Should and could I pay that off with federal loans so I don't accrue interest while in school?


I actually did this while in undergrad to consolidate all my loans under a graduated repayment plan lol.

You oughta check what the interest rates are, but if you can get deferred loans to pay off your private loans, I definitely think it's a good idea because apparantly federal loans are safer.

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coreno16
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Re: Paying for a loan with a loan

Postby coreno16 » Mon Apr 11, 2011 6:58 pm

bhan87 wrote:
drmguy wrote:So I have ~7,000 in private undergrad loans and they do not have deferred interest. Should and could I pay that off with federal loans so I don't accrue interest while in school?


I actually did this while in undergrad to consolidate all my loans under a graduated repayment plan lol.

You oughta check what the interest rates are, but if you can get deferred loans to pay off your private loans, I definitely think it's a good idea because apparantly federal loans are safer.


And almost always cheaper than an undergrad loan in terms of interest rates. Not to mention Federal loans are dischargeable in the case of your death. Whereas private loans will be pass on to next of kin.

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drmguy
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Re: Paying for a loan with a loan

Postby drmguy » Mon Apr 11, 2011 11:08 pm

coreno16 wrote:
bhan87 wrote:
drmguy wrote:So I have ~7,000 in private undergrad loans and they do not have deferred interest. Should and could I pay that off with federal loans so I don't accrue interest while in school?


I actually did this while in undergrad to consolidate all my loans under a graduated repayment plan lol.

You oughta check what the interest rates are, but if you can get deferred loans to pay off your private loans, I definitely think it's a good idea because apparantly federal loans are safer.


And almost always cheaper than an undergrad loan in terms of interest rates. Not to mention Federal loans are dischargeable in the case of your death. Whereas private loans will be pass on to next of kin.


Is it worth it even if they are grad plus loans?

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coreno16
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Re: Paying for a loan with a loan

Postby coreno16 » Tue Apr 12, 2011 5:05 pm

It depends on what your interest rates are for your private loans. GradPlus is a fixed 7.9% according to this site. http://studentaid.ed.gov/PORTALSWebApp/students/english/PlusLoansGradProfstudents.jsp

If your private loan fixed rate portion is close to this number then I'd consolidate to the GradPlus. I don't know how familiar you are with how your private loans work, but you'll have a fixed portion and a variable component (almost always LIBOR).

For me personally, this would be worth it as my private loans are ~ 8%, plus LIBOR. Not to mention the gradplus is a fixed rate versus a variable, and as previously mentioned, federal loans including the gradplus are dischargeable with death (this is unlikely but important none the less).

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DubPoker
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Re: Paying for a loan with a loan

Postby DubPoker » Tue Apr 12, 2011 5:37 pm

coreno16 wrote:Not to mention Federal loans are dischargeable in the case of your death. Whereas private loans will be pass on to next of kin.


coreno16 wrote:and as previously mentioned, federal loans including the gradplus are dischargeable with death (this is unlikely but important none the less).


I'm an 0L with no professional knowledge of how loans work, but that seems fishy and untrue.

Unless you are married to an individual or cosigned a loan, how can the debt be passed to you.

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coreno16
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Re: Paying for a loan with a loan

Postby coreno16 » Wed Apr 13, 2011 10:23 am

Sorry, I may have misspoke myself. Private loans will be included in your estate when you die, and your estate will be required to repay the loans via probate court. Some lenders may agree during this process to discharge them, but they aren't required to do so.

LB88
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Re: Paying for a loan with a loan

Postby LB88 » Wed Apr 20, 2011 11:26 pm

As far as consolidating your undergraduate loans with your gradplus loans for law school, how would one go about this? I have about 40k in loans from a private loan company, who doesn't want to defer the loans while I'm in school. Is there a way to consolidate these loans into my graduate government loans, or would I have to go through a private loan company? In addition, would I then just have to request a higher amount of money from gradplus instead of what they've already offered? Any information would be greatly appreciated, as I have to start paying back my undergrad loans this summer!

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AreJay711
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Re: Paying for a loan with a loan

Postby AreJay711 » Wed Apr 20, 2011 11:33 pm

I am doing this for whats left of my private undergrad loans. Seems reasonable to me.

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drmguy
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Re: Paying for a loan with a loan

Postby drmguy » Thu Apr 21, 2011 12:31 am

AreJay711 wrote:I am doing this for whats left of my private undergrad loans. Seems reasonable to me.



How?

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northwood
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Re: Paying for a loan with a loan

Postby northwood » Thu Apr 21, 2011 12:37 am

OP your best bet is to pay off that loan without having to take out another loan. You will end up having to pay more in interest than if you can pay it off now. I guess if thats not an option- then i would check your interest rates and go for the loan with the smaller of the one. But in my opinon- if you have to take another job then take it until you pay off that private loan. Dont go even further upside down in debt if you dont have to.

ptblazer
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Re: Paying for a loan with a loan

Postby ptblazer » Thu Apr 21, 2011 12:42 am

I think it is smart, unless the interest rates are different and as long as you don't take on more debt than you are paying off.

One thing that hasn't been mentioned yet (I think) is if you are ever in a situation of economic hardship, getting a deferment with a federal loan is A LOT easier than with a private loan. So if you are unable to find employment after you graduate or something else causes you to not be able to afford to make the loan repayments, having only federal loans might save your credit.

Renzo
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Re: Paying for a loan with a loan

Postby Renzo » Thu Apr 21, 2011 1:17 am

DubPoker wrote:
coreno16 wrote:Not to mention Federal loans are dischargeable in the case of your death. Whereas private loans will be pass on to next of kin.


coreno16 wrote:and as previously mentioned, federal loans including the gradplus are dischargeable with death (this is unlikely but important none the less).


I'm an 0L with no professional knowledge of how loans work, but that seems fishy and untrue.

Unless you are married to an individual or cosigned a loan, how can the debt be passed to you.

It passes to your estate. So if you have any assets; say a life insurance policy, or a savings account, or a car, etc., your debts get paid first out of this pot, then whatever's left goes to your family.




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