These are the most commonly-asked questions about Federal Loan Consolidation.
If you still have questions that are not answered by this consolidation FAQ, please don't hesitate to email info@classadvantage.org or call us at 800-440-8664 for a no-obligation consultation.
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%.
Student loan consolidation sounds too good to be true. Is this another debt consolidation scam? Absolutely not! The Federal government created the student loan consolidation program to help students and their parents afford higher education, so that our youth are better educated and can achieve higher earning power. Like many government programs, however, some of the rules and procedures may be a bit complicated. That's why you're encouraged to let Class Advantage be your student loan consolidation provider of choice!
How do I know if I'm eligible? You are eligible if ALL the following are true:
You have graduated, left school, or are currently
attending school either full-time or less than half time, and your loans are in repayment,
deferment/forbearance or in grace.
You have at least $7,500 in eligible student
loans you wish to consolidate.
You can certify that you do not have a Federal
Consolidation Loan application pending with another lender.
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.
What if I have already consolidated my student loans. Can I reconsolidate to
lock in the lower rate? If you have already consolidated your William D. Ford Direct Loan, you are eligible to consolidate again, through student loan reconsolidation! By law, the Federal government is prohibited from offering the same repayment discounts as the FFELP community, which allows you to receive a lower interest rate, which can lower your overall cost of borrowing even more.
You can also reconsolidate if you either received a new eligible loan since the consolidation or have left an eligible loan out of the original consolidation. If you have any questions about your reconsolidation eligibility, please call our Student Loan Consultants toll-free at (800) 440-8664.
How do I get the lowest student loan payments available today? Simply make your scheduled payments (within the first 15 days of the due date
each month) on your new consolidation loan, and the lender will 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. If you owe over $40,000 in consolidated debt, you are eligible to receive a .50% rate reduction for paying with electronic debit and a 1% rate reduction after only 24 monthly on-time payments. Contact a loan specialist for more details.
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%. For example, if you have only Stafford loans disbursed since
7/1/1998, your new fixed interest rate would be between 6.54%(in grace) and
7.14% (in repayment).
How long will it take for me to repay my loans if I consolidate? Depending on the outstanding balance on your federal student loans, you may have up to
30 years to repay your student loans:
Outstanding balance
Maximum term
$10,000 - $19,999
15 years
$20,000 - $39,999
20 years
$30,000 - $39,999
25 years
$40,000 - $59,999
25 years
$60,000 or more
30 years
Important note regarding 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 800-440-8664. Remember, you can always prepay your loan
with no penalties to reduce your total loan cost.
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.
2 Year
Graduated Repayment Plan - Interest-only payments for the first two years, followed by level payments
for the remainder of the term.
Extended
Repayment - Extends
repayment up to 25 years, if you have balance between $30,000 and $39,000
in eligible student loans.
Do I have to extend my terms when I consolidate? Absolutely not! You can keep your payments and the terms the same. Also,
you can customize it as low as 5 years (60 months). Keep in mind, there
is no prepayment penalty.
Can I switch my repayment option later on? Usually yes. 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 life of your loan term.
What are the benefits of applying during a grace or deferment period? When you apply for loan consolidation during a grace or deferment period 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
lower rate you must submit your application prior to your grace end date. Your disbursement date can be scheduled towards the end of your grace period. Your loan consultant can explain in more detail.
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 approximately 30 days.
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.
Can I consolidate with my spouse's loans? Are spousal or joint spouse consolidation loans a good idea? Yes, you may consolidate your eligible student loans with the eligible
student loans of a spouse. However, it may not be in the best interest for married couples to consolidate their loans if deferments of forbearances are an absolute necessity. Qualification and requests for deferment or forbearance will be based on both spouses' incomes.
How do I apply? It's easy! You can have us email (info@classadvantage.org), fax or mail you an application. You may also wish to download an application from this site, complete and mail us the application. Call us toll-free at 800-440-8664, and we will guide you through the application over the phone.
How long will it take for you to get my loans consolidated? It takes approximately 3-5 weeks for us to receive payoff information from your lenders,
review your application for completeness and disburse your new consolidation
loan.
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 may be cancelled or
delayed.
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.
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 .50%. To sign up
for electronic payment, please refer to the disclosure statement you will
receive when your consolidation loan is disbursed.
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.
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.
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 7.94% with a cap of 9%. Consolidation will
let you lock in a weighted rate. If you need
to borrow PLUS funds again, you will be eligible to reconsolidate your
consolidation loan with your new PLUS loans.
I'm still in school. Do I need to wait until I graduate before I can consolidate my student loans? No. If you are currently in school, you can consolidate your undergraduate school loans. You may have to waive your six month grace period but receiving a lower fixed rate could potentially save you thousands of dollars over the life of your loan and protect your loan from incresing variable interest rates. If you're in a post-graduate program, such as medical school or law school, you can consolidate your undergraduate and graduate school loans. If you have already consolidated your undergraduate loans, you may be eligible to consolidate both undergraduate and graduate loans into one payment!
Not sure if you qualify for student loan consolidation? Contact us by email info@classadvantage.org or by phone toll-free at 800-440-8664 and we'll be happy to answer any of your questions.
