Consolidation Loans - Subsidized / Unsubsidized?

[jlm1]

Hi,

 

I have been told that when a person consolidates their loans that are classified as subsidized, once consolidated these loans become unsubsidized and interest accrues on them even when they are in derferrment? Can you verify this with me. Having the loans classified as subsidized and having the gov’t paying the interest is obviously very valuable. Why would I lose that if I consolidate. That is what they are telling me at the company that services my wifes loans. Can anyone clear this up for me.

 

Thanks,

 

Jim

[BringMeTheHorizon]

My very question...I'm riding your coat tails on this one...waiting to hear what they have to say.

[fla-tan]

Hi,

 

I have been told that when a person consolidates their loans that are classified as subsidized, once consolidated these loans become unsubsidized and interest accrues on them even when they are in derferrment? This is not correct. When you consolidate your Stafford Loans, those that are subsidized remain subsidized. Those that are unsubsidized remain so. There was a time, back before 1998 that when you combined subbed and unsubbed Stafford loans, they all became unsubbed. That was changed with the reauthorization act of 1998.

 

Thanks,

 

Jim

 

 

fla-tan

[jlm1]

Unfortunately I consolidated mine back in 1996 right before the Emergency Student Loan Consolidation Act of 1997. So basically I got screwed on this one. I was not informed at the time, nor did I receive any paperwork stating that by including this one little loan in with all the rest I would lose the subsidized benefits of the other loans. It should of been their responsibility to inform me of this, but I am sure they knew they could make more money. It is also infortunate that there does not seem to be anything I can do about it. I just wonder how many students this happened to without realizing it. Thanks for replying.

 

Jim