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 How
does Federal Consolidation work?
The Federal Consolidation program takes all of your eligible Federal Student Loans
and combines them into one loan with a fixed interest rate and a lower monthly
payment. Once you send your signed and dated application back to our processing
center, we will begin processing your loans. We will send loan verification certificates
to your current loan holders to verify the current interest rate, status, and
payoff amount on your loan. Once the loan holder sends back this information to
our processing center and there are no discrepancies, your loan will be completed.
Your new lender will send the payoff amount to your current loan holders and those
loans will be "paid off" and your new consolidation loan will begin.
This entire process takes anywhere from 3 to 5 weeks. Continue making payments
on your current loans until you receive your information packet in the mail.
Do
I lose my Deferment and Forbearance rights when I consolidate?
Under normal circumstances, forbearance and deferment benefits are retained. Please
contact EduCare for more information.
What
if I leave a loan out of my consolidation?
You have 180 days after your loans have been consolidated to
include any additional Federal loans.
How
is my new interest rate determined on the consolidation loan?
Interest rates on Federal Student Consolidation Loans are determined
by the weighted average of your current interest rates rounded up to the nearest
1/8%.
What
if I am in my Grace Period?
If you are currently in a "Grace" period status,
now is the best time for you to consolidate. You are receiving a discount on your
interest rate while you are in "Grace", once you begin repayment on
your loans the discount will expire. Consolidating now will allow you to lock
in on that lower "Grace" rate while still giving you an opportunity
to not begin repayment until your grace period expires.
Can
I change my repayment plan?
Yes, you can change your repayment plan once a year without
any penalties. This will allow you to adjust your consolidation loan to fit your
current financial status.
Can
I pre-pay my consolidation loan?
Yes, you may send as much as you would like each
month to your
new consolidation loan. There are no pre-payment penalties with this
loan, therefore
you may pay it off as quickly as you would like. All monies above the
payment amount are applied directly to the principle of the loan.
Do
I begin payments before my grace period ends?
No. Your new consolidation loan will be disbursed one month prior to your grace end date, so your first payment
will not be due until your grace period has ended.
Is
there an application fee or pre-payment penalty?
No. There are no charges for a Federal Consolidation Loan and you cannot be charged a fee by the loan's guarantor.
Further, current federal law forbids prepayment penalties on all federal education loans.
How
long does the consolidation process take?
The typical processing time for a consolidation loan is three to six weeks, although many loans are completed in only
two to three weeks. Until your loan is processed, you should continue to make payments on your existing loans (unless
you are in deferment/forbearance, or in the post-school grace period).
When
is my first payment due?
The first payment on your consolidation loan is due within 45 days of the disbursement of the loan.
How
can I find all my loan information?
You don't have to! Your Personal Loan Assistant has access to the government's National Student Loan Data System
and will assist you in obtaining complete loan information. They will give you your current lender's name, balances
(without capitalized interest), as well as disbursement dates.
Why
shouldn't I take a Mortgage Loan or Private Loan to repay this debt?
Federal Consolidation Loans give you far more benefits. Your new loan continues to be Federal Guaranteed and offer
you the following benefits:
 Deferment/Forbearance Rights
Subsidy Rights
Death Payoff/Disability Forgiveness
What
are my deferment benefits?
The following are deferment options under Loan Consolidation:
In School (full time or at least half time)
Graduate Fellowship
Rehabilitation Training
Unemployment
Economic Hardship
If your consolidation loan qualifies for the interest rate subsidy, the federal government will pay the interest that
accrues on your loan during the deferment period.
Tip: You are entitled to a deferment as long as you qualify. All you have to do is submit the necessary paperwork to
your loan servicer.
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