Financial Aid
Federal Loan Consolidation Information
Important Information Regarding Federal Loan Consolidation
Should you consolidate your student loans? Maybe. There are several things to consider. Congress has changed the terms so that a loan consolidation will not be possible while in school, effective July 1, 2006. Loans issued for the 2006-2007 academic year will have a fixed interest rate, but any loans issued prior to that stay variable unless you consolidate.
Your actual consolidation interest rate will depend on the age (date) of your loans. You can further reduce these interest rates by .25% by paying by Electronic Debit Account. You should check with your loan servicer for the current interest rate on your loan(s). It is a weighted average of your existing loans.
Students who borrowed since July 1995 through SUNYIT, borrowed under the Direct Loan program and are eligible to consolidate under the William D. Ford Federal Direct Loan Consolidation Program. Information can be obtained by calling (800) 557-7392, or at their web page, http://loanconsolidation.ed.gov. This web page contains various information about loan consolidation, including a repayment calculator. If you use the web page to consolidate, with your PIN number, you will even be able to sign the new promissory note online.
Information needed for completing the Loan Consolidation application:
Direct Loan Lender: US Dept of Education
P.O. Box 5609
Greenville, TX 75403-5609
800-848-0979
Loan Type: D - Federal Direct Stafford/Ford Loan Loan
Type L - Federal Direct Unsubsidized Stafford/Ford Loan
Loan Holder: Borrower
Account Number: Social Security Number - 1
There are many private companies offering consolidation of Federal Loans. Some of these companies are doing mass mailings, encouraging you to consolidate by an upcoming deadline (after July 1, you will not be able to consolidate while in school). They may offer repayment incentives, if you make a certain number of payments on time. If you are still a student, you MAY NOT want to use a private company at this time. If you do, you will lose your grace period. Some private companies allow you to also consolidate alternative loans, including GATE loans and other non-federal loans, but at variable interest rates, not fixed. They may also have guarantee fees. Keep in mind that by using Direct Loan Consolidation while you are still a student, you will keep your grace period benefit.
If you are already in repayment and you consolidate, keep in mind that a consolidated loan will be set up with a new, 10 year repayment (or longer) and if your goal is to pay less total interest, you may want to consolidate to lock into a fixed interest rate, but continue making the same monthly payments you would have been making to pay off the loan sooner, thus reducing the total interest paid on your loan.
If you are currently a student, and will be continuing your education beyond this spring, you probably should wait to consider consolidation until March, by which time your second disbursement should be recorded at the loan servicer. All students who borrowed from Direct Lending and will be continuing as a student for Fall 2006, should ONLY consolidate with the Direct Loan Consolidation program, so that the grace period is not lost. Do not consolidate Perkins Loans. Changes in the consolidation program take place on July 1, 2006, so before you consolidate a second time, you will need to investigate the interest rate calculations to determine if another consolidation is beneficial.
Once you consolidate a loan, you cannot consolidate again unless you have additional loans. Review your options, do some research, and make the best decision for you!
If you consolidate a Federal Direct Loan with another other than Direct Lending, you will lose the 1.5% up front rebate that you were given originally on this loan.
Any questions may be directed to the William D. Ford Federal Direct Loan Consolidation Program at (800) 557-7392 or visit them on the web at http://loanconsolidation.ed.gov.