In School Consolidation

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In School Consolidation

• How-To

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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.

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I Thought I Couldnt Do This?

• We didnt think you could either
• According to Federal Regulations, a student can
  not consolidate while in school, but -
• Enter a new interpretation of the regulations
• 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 loans can be placed back into
  In-School Deferment status automatically if
  enrolled at least half time

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Why Do It?

• Rates are at historic lows and very likely will
  go UP as of July 1st
• When you consolidate, the rate locks in
• 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.

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What Can you Consolidate?

• Federal Loans
• Stafford Loans
• Subsidized and Unsubsidized
• Parent Loans for Undergraduates (PLUS)
• Consolidation Loans (previous ones)
• 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.

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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

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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

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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

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2. Interest Rates

• When you consolidate it locks in a new interest
  ratewhat will that new rate be?
• The new interest rate is a weighted average
• If you bring in only Stafford Loans at the
  current rate of 2.77, the Consolidation Rate
  would be 2.875
• If you bring, say 25,000 in Staffords (_at_2.77)
  and 6,000 in Perkins (_at_5.00), then that
  weighted average will be 3.25
• 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

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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.

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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. 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.

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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

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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
• 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!
• 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!

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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

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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)

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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

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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