In School Consolidation

1
In School Consolidation

• How-To

2
What is Consolidation?

• Federal Loan Consolidation Combining
  individual Federal loans into one new loan.
  Remember, this is a new loan with new terms and
  conditions.

3
How is this done while Im in school?

• According to Federal Regulations, a student can
  not consolidate loans that are in
  In-School status, but -
• A student (in writing) can ask for their loans
  to be put into repayment at any time
• Once a loan has been placed (even just
  momentarily) in repayment, it becomes eligible
  for Consolidation
• A students new Consolidation Loans can then be
  placed back into In-School status automatically
  if enrolled at least half time

4
Why Do It?

• If current legislation stands, then July 1st, the
  Stafford rate will become fixed at 6.8.
  Currently its at 4.7
• If you consolidate before July 1st, then the rate
  will lock where it is
• You can get more time to repay your loan
• You keep your future eligibility for
• Deferment
• Forbearance
• The longer you have to repay, the less each
  payment will be, but the more youll pay over the
  life of the loan. Contact your lender for
  specifics on how many years you qualify for
  proportional to loan amount.

5
What Can you Consolidate?

• Federal Loans
• Stafford Loans
• Subsidized and Unsubsidized
• Parent Loans for Undergraduates (PLUS)
• Consolidation Loans (re-consolidating might not
  be the best option, though more on this to
  come)
• Federal Perkins Loans
• Nursing Student Loans (NSL)
• Some lenders have a minimum balance requirement.
  If you are denied a Consolidation due to this,
  check with us and we might be able to find you a
  lender that has no such requirement.
• Only if taken out by you for your child.

6
Ok, I can consolidate this, should I?

• Even though you are eligible to consolidate all
  Federal Loans, it may not be in your best
  interest to do so.
• The next few slides will highlight 3 reasons why
  you might want to think twice about consolidating
  other loans with your Staffords

7
1. Interest Subsidies

• Some loans dont accrue interest while you are in
  school, in your grace period and when you are in
  deferment
• Subsidized Stafford Loans
• Federal Nursing Loans
• Federal Perkins Loans
• Some loans maintain that subsidy when
  consolidated
• Subsidized Stafford Loans
• Some loans lose that subsidy when they are
  consolidated
• Federal Nursing Loans
• Federal Perkins Loans

8
What does that mean to me?

• If a loan that was formerly subsidized loses its
  subsidy when consolidated, then it will begin
  accruing interest the moment that Consolidation
  Loan is completed
• If you have a Perkins Loan or a Nursing Loan and
  you consolidate it, then that portion of the
  Consolidation Loan will accrue interest when it
  otherwise would not

9
2. Interest Rates

• When you consolidate it locks in a rate how is
  it figured?
• The new interest rate is a weighted average of
  the loans youre consolidating
• If you bring in only Stafford Loans at the
  current rate of 4.7, the Consolidation Rate
  would be 4.75
• If you have one Consolidation Loan already that
  has a low fixed rate and re-consolidate that
  loan in with loans that are at 4.7, a new rate
  will be figured
• Remember that the Perkins Loan and Nursing Loans
  already have a fixed interest rate of 5.00
• When you consolidate, the interest rate is
  rounded up to the next 1/8
• Consolidation Loan interest rate calculator
  found at www.federalconsolidation.org

10
What does that mean to me?

• Say you consolidated last year when the rate was
  under 3, if you put that Consolidation Loan in
  with this years loans at 4.7, then the interest
  rate on the old Consolidation Loan will be
  changed. Its likely best to keep your previous
  Consolidation Loan at its super-low rate and just
  have two Consolidation Loans
• Nursing and Perkins Loans already are at a fixed
  rate. Combine that with their losing out on
  various privileges when consolidated adds up to
  it being best to leave them out

11
3. Cancellation Privilege

• For those who, according to the Perkins
  Promissory Note, are classified as being in the
  Nurse/Med Tech field, there is a possibility to
  cancel (i.e. not pay back) the loan. You will
  forgo your cancellation privilege if you
  consolidate the Perkins Loan.

12
Can I Cancel My Perkins Loan?

• Perkins Loan Forgiveness Definition
• Full-time employment as a nurse or medical
  technician providing health care services for 12
  consecutive months (prior to the 5-year
  forgiveness time-frame).
• A medical technician is an allied health
  professional (working in fields such as therapy,
  dental hygiene, medical technology or nutrition)
  who is certified, registered, or licensed by the
  appropriate State agency. An allied health
  professional is someone who assists, facilitates
  or complements the work of physicians and other
  specialists in the health care system.

13
Sign Me Up, but With Whom?

• First off, notice my correct usage of whom?
• There is a Federal Regulation that might have
  made your decision of lender for you
• Single Holder Rule If one lender has control of
  all of your Stafford Loans, then you must
  consolidate with them

14
Ugh, I Have More then One, Now What?

• Multiple lenders gives you the option of
  shopping around
• To make your decision, look to the Repayment
  Incentives. When you consolidate, the incentives
  you had go away in favor of new ones
• Interest rate reduction for consecutive payments
  on-time
• How much are they going to reduce it? (usually
  1)
• How many consecutive payments till I see it?
  (usually 36 to 48)
• Auto-debit option?
• Do they offer it?
• Will they lower my interest rate if I opt for it?
  (usually .25)
• Most lenders are going to be just about the same,
  and remember that time is short! When in doubt,
  go with the lender you plan on continuing to
  borrow from while at Rush.
• Limit your list of options to our preferred
  lender list as they are fair, competitive and on
  the levelBe leery of using someone youve never
  heard of that sent you something in the mail or
  called you in the middle of dinner!

15
Um, do I Have More then One Lender?

• If you arent sure who is and/or how many lenders
  you have you can visit here
• www.nslds.ed.gov
• You will need a PIN to access the info same
  one you used if you filed your FAFSA online. If
  you lost your PIN, you can get a new one here
  www.pin.ed.gov/PINWebApp/pinindex.jsp

16
I Will, I know Which Ones, I Know Who WithWhat
Next?

• Could I add any more Ws to that heading?
• Contact your Consolidating Lender
• Submit the Request for Early Repayment Form
• Each lender might call this something different
• This form can be found on your lenders website
• Some lenders dont have a form pre-made - if they
  dont, then call them to find out what they need
  from you to accomplish this step
• Most lenders will want this form faxed (contact
  lender to be sure of proper method)

17
What Now(cont.)

• If you have multiple lenders, this form will need
  to go to each of your lenders it is not the
  lenders responsibility to round up all your
  loans
• Apply for the Consolidation Loan
• Applications can be found on your lenders
  website
• Youll also need to sign a new Promissory Note
  for the new Consolidation Loan
• Most lenders at least have the option (if its
  not mandatory) for you to apply on-line and
  e-sign for the Consolidation Loan FAFSA PIN
  needed
• Follow up with each lender to make sure all of
  your loans are accounted for in the Consolidation
  Loan

18
Some Wrap-Up Notes

• Accurate contact information is VITAL!
• Your lender will need to send you a disclosure
  statement and repayment schedule
• In some cases your lender might need to send you
  time-sensitive documents to sign (i.e. the new
  Promissory Note if not e-signed)
• Interest on Unsubsidized Stafford Loans will be
  added in to the principle
• Interest capitalizes when you go into repayment

19
Good Luck!

• I hope this information helps you make the best
  decision, and makes this as painless as possible.
  Remember, time is off the essence! Many lenders
  require that all of the paperwork be completed
  before that July 1 deadline!
• Let us know if you have any questions!