Student Loans & Student Loan Consolidation
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Why should I consolidate my loans?
Loan consolidation allows you to refinance federal student loans totaling at least $7,500. Your existing enders are paid in full and a new loan for the combined balance is originated, for a new term, and often at a new interest rate.
Some of the benefits of consolidating your loans are:
- Lower your monthly payments by up to 53%
- Experience no fees and no credit check
- Lock rates as low as 2.875% for the life of the loan
- Pay your loan early with no penalties
- Extend your repayment period up to 30 years
- Have a convenient single source of student loan repayment
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How long does it take to consolidate my loans?
It takes our processing center 30-45 days or less to process your loans once we receive your completed application. During the application process, we will send you periodic email updates during the application process, if you have provided us with an email address. Once you are funded, we will notify you of the funding via email. You should then receive a repayment schedule from the loan servicer within 10 business days.
You have 180 days after your Federal Consolidation Loan's issue date to include any additional eligible loans that you did not list on the application.
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How much does it cost to consolidate my loans?
There are no fees for borrowers who wish to consolidate their loans. Legally, lenders may not charge an application fee or perform a credit check under a Federal Consolidation Loan program.
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Can I change my mind after my loans are consolidated?
By signing the application and promissory note, you have entered into a legal agreement. Please be sure that you want to consolidate your loans prior to mailing in your application. Once your loans are consoldiated, the process cannot be reversed.
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Do I have to pay while the loans are being consolidated?
It is important that you continue to make all of your regular payments on the loans that you are consolidating until you receive your new loan repayment schedule in the mail.
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How do you determine my new interest rate?
You will receive a fixed interest rate on your loan, based on the weighted average of the interest rates of the loans you are consolidating, rounded up to the nearest 1/8th percent or 8.25%, whichever is less.
Once we receive your application, we send out verification forms to all your lenders to confirm eligibility of the loans, loan balances and interest rates. We use this information in originating the consolidation and determing your new rate.
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If I defer the consolidated loan, and some of my original loans were subsidized, will the government still pick up the interest?
The government will still pick up the interest on the portion of your consolidated loan that was originally subsidized as Stafford Loans. Unfortunately, Perkins and Federal Nursing Loans lose their subsidy benefit after consoldiation.
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How do I know if I am eligible to consolidate my loans?
In order to apply for the Federal Consolidation Loan, you must have at least $7,500 in eligible federal student loans. All loans must be in the grace period, in active repayment status, or deferment, and loans to be consolidated cannot be in default. You may not have already consolidated, unless you have a new loan to add.
Eligible Federal student loans include:
- DSS- Direct Subsidized Stafford Loans
- DUS- Direct Unsubsidized Stafford Loans
- DPLUS- Direct PLUS Loans
- DUCON- Direct Unsubsidized Consolidation Loan, including Direct PLUS Consolidation Loans
- SS-Subsidized Federal Stafford Loans, formerly Guaranteed Student Loans (GSL)
- US- Unsubsidized and Nonsubsidized Federal Stafford Loans
- NSL-Federal Nursing Loans
- PERK- Federal Perkins Loans, formerly Nations Defense/National Direct Student Loans (NDSL)
- PLUS- Federal PLUS (Parent) Loans
- SCON- Subsidized Federal Consolidation Loans
- UCON- Unsubsidized Federal Consolidation Loans
- SLS- Federal Supplemental Loans for Students (formerly Auxiliary Loans to Assist Students (ALAS) and Student PLUS Loans)
- NOTE: You may consolidate a Consolidation Loan only if you are combining that loan with at least one other eligible loan for you or your spouse, although spousal consolidation has some risks.
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What if one of my student loans is in default? Can I still apply?
Due to Federal Regulations, we are not permitted to consolidate loans that are currently in default. A loan is considered to be in default only after a borrower fails to make payment on the loan for 270 consecutive days. If you remedy your default, we will be able to include the loan in your consolidation. You may also consolidate all loans not in default immediately. When you remedy your defaulted loan, add it to the consolidated loan 180 days after consolidation.
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What if my spouse and I both have education loans we wish to consolidate?
You have the option to consolidate your student loans and your spouse's student loans in order to create a new loan.
It is important to know, however, that by consolidating with your spouse, you are jointly responsible for the combined amount in the event of disability, death or divorce. And in the case of deferment, you and your spouse will both need to meet the eligibility requirements.
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What if I have already consolidated my loans?
If you have a previous Federal Consolidation Loan but you want to reconsolidate again, you may do so as long as you have at least one federal loan not included in your original consolidation, or as long as your spouse has a separate federal loan or federal consolidation loan, either of which you plan to now consolidate. Please contact a loan specialist to determine what your interest rate will be. We must use your consolidation fixed interest rate in determining your new rate, so the rate might be higher than you would want.
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What if my loans are in a grace period status?
If your loans are in a grace period status, you may apply for consolidation and receive an additional 0.6% discount to your loan's interest rate. Since the approval process takes 4-6 weeks, it's critical to apply for consolidation in advance so you can take advantage of this benefit. When you fill out your application, be sure to include your grace period end date and NOT your first payment date. We will hold the funding of your application until that date.
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What are my repayment plan options?
The repayment term is 10 to 30 years depending on the amount of your total student loan debt, including any federal loans you are consolidating and private loans not eligible for consolidation.
- Standard - Fixed monthly payment. The final payment may be slightly larger or smaller.
- Graduated - Your payments will be smaller in the beginning of repayment and gradually increase every 2 years over the course of the repayment period on the loan.
- Income Sensitive - The amount of your payments will be adjusted annually between 4% and 25% of your expected total monthly gross income. After your lenders are repaid and your Federal Consolidation Loan is originated, you will receive a packet of information from your loan servicer. It will include a worksheet to help you calculate your estimated monthly payment and instructions about what supporting material is required. If you are consolidating jointly with your spouse, payments will be based on your total household income from all sources. Income sensitive payments are only in effect for 12 months at a time. Each year you must recertify your income and provide supporting documentation.
- Extended - If you have loans totaling in excess of $30,000, you may repay over a 25-year period on a fixed or graduated payment plan. If you choose the income sensitive plan, you must have at least $40,000 in debt to qualify for a 25-year repayment period. If you have debt in excess of $60,000 and wish to repay over a 30-year period, you can select the Standard, Graduated or Income Sensitive plan.
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When does repayment begin?
You are required to begin repayment on your loan within 30 days of its funding date. Once your loan has been funded, you will receive a repayment schedule from your loan servicer.
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Can I change my repayment plan in the future?
You can change your repayment term at least once each year. This flexibility allows you to adjust your payments according to your current financial situation. However, many borrowers choose a standard plan and simply pay more when they have adequate financial resources. Since you may pay your loan off early without being responsible for the interest accrual you would have had to pay on a longer term loan, this is very advantageous.
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Are there any penalties for paying off the loan early?
There are absolutely no penalties for paying off your loan early. This means that if you pay your loan off early, you are no responsible for the interest accrual you would normally have had to pay on a longer term.
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Can I pay more than my minimum monthly payment?
You can pay more than your monthly payment if you have the financial resources to do so. Since extending your repayment term results in an increase in the interest costs you pay over the life of the loan, paying extra each month allows you to reduce these interest costs. Plus, there are no penalties for early repayment.
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What if I need to defer my Federal Consolidation Loan?
You may defer your Federal Consolidation Loan if you meet the eligibility requirements for education reasons, unemployment, economic hardship or Peace Corps Service. Please note that you lose certain deferment options, such as medical residency and military service. Please contact your loan servicer to discuss your options and obtain the forms.
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Can I get a forbearance with my Federal Consolidation Loan?
You remain eligible for all types of loan payment forbearance as described in your original Stafford, PLUS, and SLS loan promissory notes.
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