EDU Loan Support

What Is Student Loan Consolidation?

A Student Loan Consolidation allows borrowers to combine all of their federal student loans into one new loan with one lender. Sending two, three, or even four separate payments to different lenders and trying to track their loan balances, interest rates, and due dates can be quite cumbersome.  The consolidated student loan will be much easier to manage and keep track of.  There are many other benefits to the federal Student Loan Consolidation program as well.

The Student Loan Consolidation Process...

1. Determining client's current financial situation.

Eligibility for programs designed to lower student debt is determined by the Department of Education, based on key information – client's current income, their family size and their debt amount.  First all necessary information from the client is gathered. At this stage processing client's application for a Student Loan Consolidation is done directly with the Department of Education via their website at: StudentLoans.gov

It will easily be determined which programs clients qualify for and outline which program options best suits client’s needs.

2. Identify which program maximizes client's savings.

Any individual can qualify for any number of programs available through the department of education.  It’s important to choose the right program, based on client's current financial situation and future plans. Client is given in detail each qualifying program’s advantages and disadvantages so that clients can make an informed decision as to which program is best suited for them. 

Clients are then informed of the appropriate steps needed to move forward.

3. Student Loan Consolidation Application process.

If client chooses to hire a private company for their student loan consolidation service they will handle the application process for them from start to finish.  They will determine, gather and fully prepare all documentation needed to qualify client for the program chosen.  After the application is deemed sufficient, it is then submitted by the private company to the Department of Education on client's behalf. 

The entire Student Loan Consolidation process usually will take anywhere from 21 to 60 days to complete.

Note: Client should be advised that all Student Loan borrowers may also choose to complete the application process on their own without the help of a private company as the programs are available directly through the Department of Education.

Understanding Student Loan Repayment Options

Consolidating a client's Federal Student Loans gives them a few different Student Loan Repayment options. This module is designed to explain how the calculations are made, and also to assist clients on when it may be wise to choose one repayment plan over another. Each have their benefits, and client should allowed to make the final decision as to which option they think will benefit them the most in the short and long term.

The repayment plan options are: Standard Repayment, Graduated Repayment, Extended Fixed Repayment, Extended Graduated Repayment, Pay As You Earn, Income Based Repayment (IBR), Income Contingent Repayment (ICR), and finally Income Sensitive Repayment (ISR).

Standard Repayment Plan

In the standard repayment plan, the payment on the client's loan is calculated like any normal loan payment, based upon the size of the loan and also the term of the loan. The term is always based on the size of the loan. Depending on client's income and family size, the standard repayment plan can be a good option if:

They want to pay off the loan as soon as possible and currently have less than 30 years left on the term.

They do not qualify for an income based repayment plan because of a higher income

Their loan amount is small enough where they can be paying a minimal amount over a short period rather than extending it for an additional X amount of years.

The standard repayment plan allows client to take care of their loans in a timely manner if they are making regular and full payments on them. They will pay less interest on a standard repayment plan than they will under the graduated.

Often times customers that do not qualify into either of the Income Based Repayment plans do not see a benefit of consolidating their loans into a Standard Repayment plan when their current payment can be nearly the same. This often is misguided as one of the major benefits of this consolidation is the flexibility with the repayment plans. If they come under hardship in the future, at any moment they can change their repayment plan into an Income Based Repayment plan. What this does for them is allow them to then have a payment based on their income, which may prevent them from falling into default on their loans. In many cases their payment can roll to zero on their loans. This is not a deferment status, which essentially pauses their term. They would have a zero payment for however long their hardship lasts, and the term continues to move forward. This is where the forgiveness aspect plays a large roll. Once the term is over the loan is completely forgiven. This is a huge benefit to the program that is often overlooked by clients until this benefit is explained to them.