In School Consolidation

1
In School Consolidation

• Presented by
• Student Financial Aid

2
What Changed??

• Until recently a borrower had to be out of
  school to consolidate their student loans
• Out of School means
• Grace
• Repayment
• The U.S. Department of Education recently updated
  their rules to allow in-school consolidation
  by allowing students to request early repayment.

3
How Does This Effect You?

• By consolidating your current federal loans you
  protect yourself from increased interest rate
  increases. (on your current loans)
• This will save you money over time by paying less
  interest.

4
Define a Consolidation

• Paying off one or more federal student loan(s)
  with one new federal loan.
• Upon Consolidation the old loans go away the
  borrower has one new loan.
• Refinancing your educational debt.
• Changing the current terms of your loan for more
  favorable terms.

5
What Does This Mean 4 Me??

• In general, federal loans have a variable
  interest rate
• Currently, 2.77
• (loans issued prior to July 1, 1998 have higher
  interest rates)
• Maximum of 8.25
• Consolidation Loans have a fixed interest rate
• Fixed The rate will not change

6
How Are the Interest Rates Determined?

• Federal Stafford Loans- Variable- Adjusted
  Annually
• In-School 91-Day T- Bill 170 basis pts
• Repayment 91-Day T-Bill 230 basis pts
• Currently 2.77 in-school and 3.37 repayment
• Federal Consolidated Loans- Fixed
• Weighted average of the underlying loans rounded
  to the nearest 1/8th of 1
• Stafford Loans originated after July 1, 1998 the
  rate would be 2.875

7
Projected Stafford Interest Rates

• According to the Department of Education
  effective July 1, 2005.
• Stafford In-School/Grace or Deferment 4.70
• Stafford Repayment or Forbearance 5.30
• Federal PLUS Loans 6.10

8
An Example.

• 75,000 loan of 20 years
• Rate 2.875 Rate 4.611
• Payment 411 Payment 479
• Total Paid 98,640 Total Paid 114,960
• Interest 23,640 Interest 39,960
• Savings of 16,320 over the life of the loan.
• (assuming no early payments.)

9
Other Things To Know.

• Only Federal loans can be included in a
  Consolidation Loans
• No private loans!
• Perkins loans- if consolidated lose the subsidy
  if included in a FFELP consolidation loan.

10
Step 1..

• Contact your lender (s) and request that your
  loans be moved into a repayment status.
• As of May 16th the Department of Education has
  indicated that a borrow may simply call.
• If you have more than one lender, you must
  contact each one separately.

11
Things to Know

• In-School Deferment is available while you are in
  enrolled.. No payments are required.
• Consolidation Loans have no grace period.
• This means you will need to work closely with
  your lender as graduation nears
• Economic Hardship Deferment
• Administrative Forbearance
• It may be worth it to lose the grace period to
  lock in this low rate.

12
Final Things to Know..

• Single-holder rule
• If all of your loans are with one lender you must
  use that lender for your consolidation loan.
• If you have more than one lender you may choose
  any lender you want.
• Borrower benefits
• Lenders often times offer benefits for on-time
  payments These will most likely go away if you
  are returning to school.

13
Step 2

• When all loans are moved into the repayment
  status Complete a Consolidation Application
• On-line
• You will need
• Loan Type
• SSSubsidized Stafford
• US Unsubsidized Stafford
• Account Number
• Your Social Security
• Outstanding Balance
• Interest Rate 2.77 for current student
  in-school

14
Where Are Your Loans??

• Comprehensive loan detail can be found _at_
• www.nslds.ed.gov
• You will need your FAFSA pin
• Loan Locator
• www.loanlocator.org

15
KUMC Lenders

• Access Group- www.federalconsolidation.org
• 1-888-250-6401
• Kentucky Higher Education Student Loan Corp.
  www.kheslc.com
• 1-800-693-8220
• ASAP Union Bank Trust, Health Education
  Solutions
• www.consolidation.nelnet.net
• 1-877-975-3957

16
KUMC Lenders

• Commerce Bank of Topeka, St. Louis Kansas State
  Bank
• www.salliemae.com 1-888-272-5543
• Security Bank of KC www.mohela.com
• 1-800-6MOHELA or www.salliemae.com
• 1-888-272-5543
• US Bank AHELP/ US Bank www.usbank.com
• 1-800-377-5626
• Wells Fargo www.wellsfargo.com 1-800-658-3567

17
Any Questions??

• We are not experts on the In-school consolidation
  process.
• You will need to contact your lender(s) to see if
  this options is right for you.

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In School Consolidation

• Please contact your lender for more information
  regarding In-school consolidation.