Federal loan consolidation provides an individual the opportunity to consolidate all outstanding loans held by various lenders into a single new loan that can be recovered in single monthly payments. Federal loan consolidation brings in a positive payment history thereby improving your credit score. The loans that can be included in a federal consolidation process are the Stafford loans, subsidized and unsubsidized (also called guaranteed student loans), Perkins loans, PLUS Loans, federal insured student loans, supplemental loans for students, health education assistance loans (HEAL), nursing student loans (NSL, and health professions student loans.There are certain benefits in consolidating a loan. Federal consolidation allows borrowers to lock in current low rates thus protecting from future rate increases. By Jimmy Sturo

Federal Loan Consolidation for Medical Students
By Matt Kelly

By the time you graduate you will most likely have at least $200,000.00 in student loan debt. You will probably have both federal and private loans but for this article we will be dealing with only your federal loans.

Loan forgiveness – With Stafford loans it doesn’t matter if you’ve consolidated the loans or not, they can be forgiven either way. With Perkins loans you lose any chance of forgiveness if you consolidate them so you should check into it before deciding to add them to a consolidation.

The National Health Service Corps offers loan forgiveness programs for physicians who agree to serve a certain number of years in areas that lack adequate medical care. Many hospitals and private care facilities offer loan repayment as an employment incentive for medical personnel.

Deferral and forbearance – In deferral the government pays the interest on the subsidized portion of your loans, in forbearance you are responsible for all of the interest. You must qualify for deferral, some fellowships qualify but since residency is considered employment the only option there is if you can show an economic hardship. In general your loan payments must exceed 20% of your disposable income to qualify for economic hardship.

One of the benefits to consolidation is your deferral and forbearance time is renewed.

Capitalizing interest – When choosing a consolidation company ask how often they capitalize interest during your deferral or forbearance period. A company that capitalizes quarterly will cost you more in the long run than a company that capitalizes yearly. A student loan consolidation can save you thousands of dollars in interest but you must choose your company wisely.