Student Loan Collections

If you are making student loan payments to more than one lender, loan consolidation could simplify your loan repayment. Consolidation helps you by combining several student loans into one. This means one monthly payment to one lender. Your paperwork is reduced too. If you request a deferment or forbearance you only need to request and complete one set of forms instead of additional forms for each of your lenders. Depending on the size of your debt, your repayment period may be extended, resulting in a more affordable monthly payment. Some companies offer an income-sensitive repayment plan. By consolidating you can most likely lock in a fixed interest rate that protects you from future interest rate increases on your Stafford Loan, but this is not always the case, check with your consolidating lender before applying.

Consolidation does have drawbacks. You may pay more interest costs if your repayment period is extended. A consolidation loan may not have as many deferment benefits and will not offer the cancellation benefits that a Federal Perkins Loan offers. It is possible that the interest on the Federal Perkins Loan portion of your consolidation loan may not be deferred during the time of a deferment; check with your consolidating lender before applying.

In general, most borrowers do not consolidate their loans until their grace period ends. This allows borrowers the full benefit of their initial grace period.

Advantages of Loan Consolidation:

• Extended repayment period up to 30 years
• Lower monthly payment amount
• Convenient, single monthly payment

Disadvantages of Loan Consolidation:

• Extended repayment period adds to total interest expense
• Interest rate may be higher than rate for original loans. (Interest rate is the weighted average between the loans being consolidated.)
• Federal Perkins Loan borrowers may lose eligibility to cancel their debt for full-time employment in certain fields of teaching, law enforcement, public service, service in the Peace Corps, or service in the military. Please refer to your promissory note for more information on your cancellation benefits.

Eligibility for Loan Consolidation:
Most federal student loans and PLUS Loans can be consolidated. The loans you’re consolidating must be in their grace period, repayment, deferment, or forbearance (some exceptions apply). For more information go to http://mapping-your-future.org/paying/cnsldte.htm.

Married couples can consolidate their combined loans. This generally requires an agreement to be responsible for the loan regardless of individual debts or any change in marital status. Be sure to check with your lender regarding deferment qualifications; generally both of you will have to meet the deferment requirement. Because of this it is probably best to consolidate your loans separately if you choose to consolidate.

Borrowers with delinquent or defaulted loans may also consolidate, provided they meet the repayment criteria set by the owner of their loan.

The Process:
One or more of your current lenders may offer Loan Consolidation. You should first contact them to see if they offer a consolidated loan. Some lenders may require that they already own one of your loans. If you do not know who your lender is, you can access your student loan information online at http://www.nslds.ed.gov/. If you are unable to consolidate with your current lender, there are lenders listed below that may be able to help you. This is not an inclusive list. There are many new lenders now offering consolidation. For a list of federally approved consolidation lenders go to http://www.nela.net, select about student loans, loan consolidation, consolidating lenders.

*Direct Loan will consolidate most any federal loan regardless of the loan status (ie.default).

You may find that you are able to choose from several payment plans tailored to meet your present needs. If you will not be qualifying for the cancellation benefits offered by the Federal Perkins Loan Program, consolidating your loans could be the answer for you. Please remember you must continue to make payments to NCSU, or our billing service, until your consolidation loan is funded.

Private student loans cannot, in general be consolidated with federal student loans. Check out the Smart Student Guide to Financial Aid website at http://finaid.org/studentloans/privateconsolidation.phtml for information on lenders who may consolidate a private loan.

Warning
It is always good financial practice to never give information to consolidation companies who call you first. If the company seems to have an interesting deal, research it first, confirm any important selling points, then call THEM at their listed number.