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If your brother does not attend a "Direct Loan school" and doesn't otherwise have any Direct Loans, how is he in category 2? I think he is in a later example of the site (I haven't looked at it lately so I am doing this from memory.) That's the one where T.H.E. gets to offer "income contingent repayment terms acceptable to the borrower" and the borrower gets the choice to either go with those terms, or reject them and go with Direct. The choice was definitely with the borrower in 1995, and I believe that is still the rule today.

If his grace period starts before September 30, 2001, he can get the same deal as we have all been talking about here. If he graduates after 9/30/01, he may still get a Direct Loan incentive discount if one is still out there being offered. We have previously discussed the politics behind this, and you should go back to those posts.

If your brother graduates some time after July 2002, then he is "at the mercy" of whatever T-bill auctions there are to come. Who knows, the rate may actually be lower then. It really depends on the economy. Also, (and this is from previous posts), the whole Higher Education Act comes up for renewal before October 2003---so it's anyone's guess what rates on NEW consolidations of that time will be.


When I said he was in "category 2", I meant that he attends a non-DirectLoan school. So he would need to meet the requirements set forth for that category (attending a non-DirectLoan school and having at least one Direct Loan and at least one Direct Loan or FFEL in an in-school period). He doesn't meet this requirement.

The Student Guide from the Direct Loan site says:

"Borrowers who are consolidating all FFEL loans that are in a grace or repayment period must certify on the application that they have checked with a FFEL consolidation lender and (1) have been unable to obtain a Federal Consolidation Loan, or (2) have been unable to obtain a Federal Consolidation Loan with income-sensitive repayment terms acceptable to them. The reason why a borrower may be unable to obtain such a loan include but are not limited to: (1) lenders requiring a minimum loan amount, and (2) some lenders not offering income-sensitive repayment terms."

This does not include in-school borrowers. The conditions for consolidation for in-school borrowers are what I illustrated in my previous post. Here are examples directly from the guide related to in-school borrowers:

"A borrower who is attending a Direct Loan school half time and wishes to consolidate all of her loans (two FFELs in an in-school period) is eligible for in-school consolidation.

However, a borrower who is attending a non-Direct Loan school half time and wishes to consolidate all of his loans (two FFELs in an in-school period) is NOT eligible for in-school consolidation."

The "half-time" term is just what Direct Loan uses to designate a full-time student (eligible for loans). The second example is where my brother lies.

I plan on paying my loans off in the next 12-24 months, so the rate cut won't do that much for me (might save a few hundred bucks). I'll settle for something near 6%. But locking in something in the low to mid 5% could save my brother alot of money while still in school. Just trying to figure out the best plan for him.

-H
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