When to consolidate loans?

[fvwags]

Asking for a friend:

Current 3rd year fellow, looking to do 1 more year advanced fellowship before starting real job. Roughly $250,000 in debt to multiple loan servicing companies at different rates (Navient, Discover, AES, Sallie Mae). Still trying to figure out rates at all the different places but the biggest is Navient (180,000 at 4.75%). Question is: when is a good time to consolidate loans? Currently in forbearance, at all places. Cannot afford any payments due to multiple issues (cost of living and child support). Would it be best to consolidate now? Or wait till he has a job after fellowship next year? Can you consolidate your loans and then have them still be in forbearance? Thanks so much! Trying to help tackle the problem!

[Joy Sorensen Navarre Navigate]

For federal loans, you may apply for a Direct Consolidation loan. It remains eligible for forbearance.

You didn't mention your career plans. If you plan to pursue a career in a government, tribal or nonprofit institution, you will want to evaluate your options with Public Service Loan Forgiveness prior to consolidating with a private lender.

Certain private lenders offer consolidation and refinance loans with minimum $0 or $100 monthly payments.

[DMFA]

Wow.  That's not a positive situation.

How much of those are federal loans?  At least the biggest chunk of it (Navient) looks like it is.  That's not the worst interest rate I've seen for federal loans; my wife's are at 6.625% for a similar amount.  She's doing the PAYE/PSLF stack, though.

Seems like getting into the nitty gritty of why you're not able even to afford a few hundred dollars per month of income-driven payments is difficult...which is too bad, since all those minimal (or even $0) payments could have been eligible for PSLF if it might be a good way forward for you.  Forbearance is almost always the worst-case scenario (other than default, obv).

Step one is to calculate your RePAYE amount with your current federal lenders.  This will subsidize half of your unpaid interest every month and will help further interest from accruing.  You don't have to consolidate to do it - esp since consolidating will probably give you a higher rate than your Navient rate of 4.75%.  You'd just be filing it separately with each servicer.

If you can get less interest accrual with any affordable monthly payments through consolidating, then do it ASAP.  You will almost 100% likely get a better interest rate through a private lender...although private consol/refi will usually get you a better rate and terms once you've got a significantly higher income, i.e. when you're out of training.  You might re-re-finance at that point, though.

Again, not a good situation, but not the end of the world.  This seems like something you'd really only be well-served by sitting down with a professional (see above post) and hashing it out number by number.  Every situation is unique.  There is probably a lender who really wants your debt.

[fvwags]

Thanks so much for the replies! He's already 9 years into training so the PSLF boat has already left. He's planning on doing pediatric cardiac surgery fellowship next year. Then the following year would get the high paying job.

That's a good point with the RePAYE calculations. I'll have to get his AGI to see what it would come out too. If it's low enough that'd probably be his best bet. I'm thinking his best bet would be to consolidate the private loans he has to one company for lower rates (still working on figuring out the rates on those loans) and then doing RePAYE for the next year or so for the federal loans. I'll update it when he gets the AGI and all the companies/rates.