Consolidation and grace periods

[VibrantEcho]

We've sent all DH's paperwork to ACFS (thanks for the suggestion, creditboards!) as we were anticipating that he will graduate at the end of the semester. (Turns out he's not, but that's a long complicated story and not really relevant to my question).

 

With ACFS, do we still get his 6 month grace period? He will be taking one class next January, but it's only 5 credits and we'll be paying cash, so I'm assuming this shouldn't affect his consolidation plans.

 

Thanks!

 

Fiona

[Havok]

Well I was gonna answer but the more i think about it the more im not sure i know the right answer. My thought is that the grace period starts after he has graduated.

[VibrantEcho]

I wish, but I think it's when he stops being a full-time student. He won't be taking ANY classes in the fall, the only reason this is dragging out is because the ONE class he needs to retake is offered only in the spring.

 

Fiona

[ziggypop]

Unfortunately, your grace period does terminate once you consolidate (although my first consolidation payment wasn't due until about 45 days after it was completed, so you do get a month or two there at the beginning). But, since interest rates on consolidation loans are expected to make a pretty big jump when the USDOE sets the new interest rates effective July 1 of this year and since you get some pretty huge interest rate reductions if you consolidate during your grace period, I would go ahead and consolidate even though you would lose out on the grace period (that's IMO, though, so YMMV, of course!). You'll just need to make sure to get the consolidation paperwork all completed and finalized with the company before July 1, but it sounds like you're well on your way for that.

 

I hope this helps! Good luck!!

[stimpy]

Fiona -

 

Let me see if I got this straight - you submitted an application for consolidation to ACFS, anticipating DH's graduation this spring - he is not graduating, but will not be taking classes between the end of the spring semester 2005 and the beginning of spring semester 2006--is that right?

 

If that's the case, then ACFS will probably hold the consolidation until just before the rate hike due to take effect in July, which means that DH will likely forgo whatever portion of his grace remains after july 1st.

 

This is actually a good thing, as rates are probably going up at least 2%, which could end up costing you significantly more in interest if you wait til after DH's grace is up.

 

It may be as late as August before you receive the disclosure for the consolidation loan, with the first payment due in September.

 

Please keep in mind, if you are unprepared to begin payments when they are due, you have the options of forbearence, or deferment, if you qualify. Also, if DH is enrolled in school at least half-time when he returns in January 06, he can put his consolidation in an in-school deferment. Just contact the servicer, and request the forms to turn in to the financial aid dept. @ his school. That will suspend the payments on the consolidation until he finishes, or drops below 1/2 time. How much is half time? It varies from school to school, I would call the school and ask if 5 credits meets the criteria.

 

I would also call ACFS, just to verify my speculation.

 

Good luck, hope this helps

[VibrantEcho]

Yes, you got that all correct.

 

We shouldn't have any problems making payments as soon as they are due, I just wanted to have some idea of what to expect.

 

I will confirm with ACFS when they call with the consolidation details.

 

Fiona

[Gypsee]

I know its common for lenders to state that grace periods end once you consolidate and you lose the remaining time since payments start 30 days or so after consolidation, but it depends on the lender. I just graduated this month, contacted Edfinancial where all my loans are at, started the consolidation process, and they will honor the grace peroid. I dont have to start repayment until Dec 05 so make sure you ask them about it!