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What is a Federal Consolidation Loan?
A Federal Consolidation Loan is a loan that repays all your outstanding
eligible federal student loans, and replaces the multiple
payments you may be making each month with a single
student loan payment. In most cases, your repayment
term is extended to make your monthly payments more
affordable, however, you may always prepay your loan
with no penalties. The interest rate on the consolidation
will be a fixed rate for the entire term equal to
the weighted average interest rates of your outstanding
student loans rounded up to the nearest 1/8% not to
exceed 8.25%.
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How do I know if I’m eligible?
You are eligible if ALL the following are true:
- You have graduated, left school or are attending school less than half time.
- Your loans are in grace (the period after you leave school or attend less than half time (when no payments are due), or repayment.
- You have at least $10,000 in eligible student loans you wish to consolidate.
- All of your loans are fully disbursed.
- You can certify that you do not have a Federal Consolidation Loan application pending with another lender.
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What’s the minimum balance?
You must have an outstanding balance of $10,000 in eligible
student loans to consolidate them under this program.
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What loans can I consolidate?
Federal and Federal Direct Stafford (subsidized and unsubsidized)
Federal and Federal Direct PLUS
SLS (Supplementary Loans for Students)
Federal Perkins
Federal Nursing Student Loans (NSL)
Federal Health Education Assistance Loan (HEAL)
Federal Health Professional Student Loans (HPSL)
Health Professions Student
Loans (HPSL)
Loans for Disadvantaged Students (LDS)
Federal Insured Students Loans (FISL)
Federal Consolidation Loans
Federal Direct Consolidation Loans
A note about defaulted loans: You may consolidate defaulted
loans as long as you make three consecutive monthly payments to your guarantor
prior to applying for loan consolidation.
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How do I get the lowest student loan payments available today?
Make your first 48 scheduled payments (within
the first 15 days of the due date each month) on your
new consolidation loan, and we'll automatically reduce
your interest rate by one full percentage point and
leave it there as long as you continue to make on-time
payments. Pay electronically (direct debit payments
from your checking or savings account) and you can
reduce your interest rate by an additional .25 of
a percentage point, as long as you continue to make
your payments electronically. When you qualify for
both benefits, you can reduce your interest rate by
1.25% and save hundreds, even thousands of dollars
on your total loan costs.
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What will my new interest rate be?
Your new interest rate will be fixed, and
is calculated by taking the weighted average of the
rates on the loans you wish to consolidate, and rounding
up to the nearest 1/8%. In no case can your
new interest rate exceed 8.25%. For example, if you
have only Stafford loans disbursed since between 7/1/98 and 6/30/06, your
new fixed interest rate would be between 6.625% (in
grace) and 7.25% (in repayment). To qualify for a lower
rate, sign up for direct debit (.25% off) and make
your first 48 payments on your consolidation loan
on time (1% off). By taking advantage of our rate reductions, you can reduce your interest rate to 5.375% (in grace) and 6.00% (in repayment).
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Is there a fee to consolidate?
No. Lenders pay the fees, you don’t.
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Is there a credit check?
No credit checks are required to consolidate your loans.
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How long will it take for me to repay my loans if I consolidate?
Depending on the outstanding balance on your federal student
loans (even those you may wish to leave out of the consolidation), you
may have up to 30 years to repay your student loans:
|
Outstanding balance | Maximum term
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$10,000 - $19,999 | 15 years
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$20,000 – $39,999 | 20 years
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$40,000 - $59,999 | 25 years
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$60,000 or more | 30 years |
Important note about your repayment term: You may choose a repayment term
that is shorter than the ones noted above. Just
call one of our Student Loan Consultants toll-free at (877)
663-7467. Also, you may always prepay your loan
with no penalties to reduce your total loan cost.
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What are my repayment options?
You may choose from the following repayment options:
- Level Repayment Plan – your least expensive option.
Payments are fixed over the life of the loan and
repay all principal and interest due each month.
- Graduated Repayment – can reduce your payments
by more than 50% because you make small, interest-only
payments at the beginning of repayment, and larger
payments later on, when you may be in a better position
to afford them. You may choose from the following
graduated repayment plans:
2 Year Graduated Repayment Plan – Interest-only
payments for the first two years, followed by
level payments for the remainder of the term.
4 Year Graduated Repayment Plan – Interest-only
payments for 2 years followed by 2 years of payments
that include interest and a portion of principal,
followed by level payments for the remainder of
your term.
- Extended Repayment – Extends repayment up to 25
years, if you have balance between $30,000 and $39,000
in eligible student loans.
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Can I switch my repayment option later on?
Usually yes. Because federal law stipulates that your
largest federal student loan payment on an account cannot exceed three
times your smallest payment, you may be restricted from switching repayment
options late in your consolidation loan repayment term.
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Are deferments and forbearance allowed under a consolidation loan?
Yes, please refer to the Federal Consolidation Loan Deferment and Forbearance Benefits page for
a complete description of deferment and forbearance eligibility rules.
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What are the benefits of applying during a grace or deferment period?
When you apply for loan consolidation during a grace or deferment
period (authorized time periods when payments are not due), you are eligible
for a further reduction of your consolidation loan interest rate.
That’s because during these periods, your variable Stafford loan interest
rate is .6% lower than during active repayment. If you wish to take
advantage of this opportunity, check the appropriate box on your application.
We will schedule your disbursement for a date near the end of your grace
or deferment period, so you won’t have to make payments until your grace/deferment
has expired.
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Do I get a grace period on my consolidation loan?
No, once you have been notified that your consolidation loan
has been disbursed, you will begin repayment within 60 days.
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What about the subsidy on the Stafford loans I‘m consolidating?
Borrowers who are eligible for interest subsidies on their
underlying Stafford loans, will continue to receive subsidy benefits on
the portion of the consolidation loan that repays the original subsidized
Stafford loans.
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Can I consolidate with my spouse's
loans?
Yes, you may consolidate your eligible student loans with the
eligible student loans of a spouse, however, should you divorce, or your
spouse dies or becomes disabled, you may be responsible for the entire
loan amount. Also, if you ever wish to defer payments on the consolidation
loan, both you and your spouse must be eligible for a deferment in order
for it to be granted. In order to consolidate with your spouse, please call
one of our Student Loan Consultants toll-free at (877) 663-7467.
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How do I apply?
Apply Now, download,
complete and mail us your application or email us
to request to have an application mailed to you to
complete and return. You may also call us toll-free at
(877) 663-7467, and we will guide you through the
application over the phone. Whichever method
you choose, you can complete the application in about
15 minutes, as long as you have gathered the paperwork
you have about the loans you wish to consolidate beforehand.
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How long will it take for you to get my loans consolidated?
It takes 6-8 weeks for us to receive payoff information from
your lenders, review your application for completeness and disburse your
new consolidation loan.
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What do I do while my loans are being consolidated?
Continue to make regular monthly payments on your student loans!
If they become delinquent or go into default, your consolidation loan will
be delayed.
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Who will I pay each month?
Once your loans are consolidated, you will receive a payment
book containing all the information you will need about your new loan servicing
center.
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Can I pay my consolidation loan electronically?
You may choose to have your monthly consolidation loan payments debited
electronically from your checking or savings account. When you do, we'll
reduce your consolidation interest rate by an additional .25%. To sign
up for electronic payment, please refer to the disclosure statement you
will receive when your consolidation loan is disbursed.
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Can I prepay my consolidation loan?
Yes, you may always prepay (pay ahead) your consolidation loan.
Just put a note in with your payment that specifies how much you wish to
apply to principal and how much to interest.
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I attended graduate school, am I still eligible?
Yes, as long as you have eligible loans you wish to consolidate. Most
people who have attended graduate school have borrowed more for their
education, and so have more to save by consolidating. Loan consolidation
can help you lock in a very low interest rate, cut your payments by more
than half and let you make a single payment for all your eligible student
loans.
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What if I have already consolidated my student loans. Can I do it again
to lock in the lower rate?
Yes, but, by law, in order to reconsolidate
you must have either received a new eligible loan
since the consolidation or have left an eligible loan
out of the original consolidation. An existing consolidation
loan with no other eligible debt cannot be refinanced.
If you have any questions about your eligibility,
please call one of our Student Loan Consultants toll-free at
(877) 663-7467.
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I have borrowed PLUS loans for my child's education. Can I
consolidate them?
Yes, you should take this opportunity to
lock in a great rate on your PLUS loans, even if your
child has not completed school. If you are borrowing
for the current academic year (or have borrowed since
July 1, 1998) your variable PLUS interest rate is
4.22% with a cap of 9%. Consolidation will let you
lock in a rate of 4.25% on your PLUS loans for life.
If you need to borrow PLUS funds again, you will be
eligible to reconsolidate your consolidation loan
with your new PLUS loans.
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