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Start exploring loan consolidation options during the grace period. If you are a new graduate with federal subsidized loans, the Federal Consolidation Loan Program may allow you to extend the repayment of your loans beyond the standard 10 years, depending on your loan balance. For example, physicians with loan balances in excess of $60,000 have up to 30 years to pay back their loans after consolidating. This federal program has a number of additional options that can improve your debt situation, reduce monthly payments by up to 50 percent and increase the amount of disposable income you have.
- Lock in your interest rate and save thousands of dollars over the life of the loan.
- Receive a 0.625% rate reduction by consolidating your federal loans before the six-month grace period ends.
- Combine all of your federal loans into one convenient monthly payment—it is much easier to manage one loan than several.
- Incur no penalties if you make additional payments or pay the balance of your student loans early. Keep in mind that these are simple-interest loans; it is wise to pay off higher interest debt such as car notes, private loans and credit cards before low-interest federal loans.
- Improve your credit score—consolidating may improve your loans may improve your credit score, making it easier for you to make significant financial investments (like buying a car or starting a new practice). Making your student loan payments on time is another way to maintain good credit.