CONSOLIDATION
QUESTION & ANSWER GUIDE
QUESTIONS SPECIFIC TO IN-SCHOOL CONSOLIDATION:
- Can I consolidate while I am still in school?
- What will my interest rate be if I consolidate BEFORE June 30, 2006?
- What will my interest rate be if I consolidate AFTER June 30, 2006?
- How is the consolidation loan interest rate calculated?
- Can I consolidate my in-school loans and still maintain my grace period?
- Can I defer my consolidation loan while I am still in school?
- Will the government pay the interest on the unsubsidized portion of my consolidation loan while it is deferred?
- How are the subsidized and unsubsidized portions of the consolidation loan determined?
- If I request early repayment, will I have to make payments while the consolidation loan is being processed?
- What is the minimum balance to consolidate with National Education?
- Can I complete the consolidation application online?
- Can I fax my consolidation application to National Education?
- Will consolidation affect my eligibility for future student loans?
- If I consolidate now, then take out loans in future years when I'm in school, what are my consolidation options down the line?
- How long will the consolidation process take?
- Why do I need to consolidate now?
- There is only room for 16 loans on the page where I list the loans I would like to consolidate. What if I have more than 16 loans to consolidate?
Q. Can I consolidate while I am still in school?
A. Federal rules allow you to consolidate your loans before you graduate if you are willing to place your loans into repayment status now. That makes them eligible to consolidate. To consolidate your loans before you leave school, you must formally request that your loans be placed into repayment status. A form, called the "Early Repayment Request" is available through this link. Be aware, however, that while National Education will allow it, some lenders may not honor your request for early repayment. If this occurs, you will not be able to consolidate your in-school loans with that lender. After JUNE 30, 2006, you will no longer be able to consolidate while in school.
Q. What will my interest rate be if I consolidate BEFORE June 30, 2006?
A. Consolidation loans have a fixed interest rate. The interest rate will be the weighted average of all the rates of the federal loans consolidated, rounded up to the nearest 1/8%, not to exceed 8.25%. Borrowers with loans originated on or after July 1, 1998 may qualify for the interest rates below. The actual rate will depend on the amount and rate of the loans you consolidate.
- Stafford loan in school, grace, or deferment - 4.750%
- Stafford in repayment - 5.375%
- PLUS Loans - 6.125%
Q. What will my interest rate be if I consolidate AFTER June 30, 2006?
A. The rates have not been determined yet, but they are likely going to be higher than they are now.
Q. How is the consolidation loan interest rate calculated?
A. Consolidation loans have a fixed interest rate. The interest rate will be the weighted average of all the rates of the federal loans consolidated, rounded up to the nearest 1/8%, not to exceed 8.25%. Click here to see examples.
Q. Can I consolidate my in-school loans and still maintain my grace period?
A. No. In order to consolidate your loans, you must waive your grace period and enter repayment early. Federal rules allow you to consolidate your loans before you graduate if you are willing to place your loans into repayment status now. That makes them eligible to consolidate. To consolidate your loans before you leave school, you must formally request that your loans be placed into repayment status. A form, called the "Early Repayment Request" is available through this link.
Q. Can I defer my consolidation loan while I am still in school?
A. Yes. You can postpone payments of both principal and interest while you are in school by requesting an in-school deferment. During your deferment, the federal government pays the interest that accrues on the subsidized portion of a Federal Consolidation Loan.
Q. Will the government pay the interest on the unsubsidized portion of my consolidation loan while it is deferred?
A. No. During periods of authorized deferments, the federal government pays the interest that accrues on the subsidized portion of a Federal Consolidation Loan.
Q. How are the subsidized and unsubsidized portions of the consolidation loan determined?
A. The loans that you currently have are classified as subsidized or unsubsidized Stafford loans. On subsidized Stafford loans, the Federal Government pays the interest while you are in-school, in the grace period, and in an authorized deferment. For all other loans, called unsubsidized loans, you are responsible for paying all interest that accrues on the loans.
Q. If I request early repayment, will I have to make payments while the consolidation loan is being processed?
A. No. By signing the "Early Repayment Request" you are also requesting that your loans be deferred while you are in school on at least a half time basis.
Q. What is the minimum balance to consolidate with National Education?
A. $7,500
Q. Can I complete the consolidation application online?
A. There are two online options available to begin the consolidation process:
- If you have existing loans serviced by National Education, you can LOG IN NOW to download and print a pre-filled Consolidation Loan Application. You will then need to complete the form (i.e. - add loans from other lenders you wish to consolidate, sign and date the forms, etc) and mail the forms to NES at the address indicated.
- By clicking here, you can download blank application forms. You will then need to print them, complete them, and mail them to NES at the address indicated.
Q. Can I fax my consolidation application to National Education?
A. Yes. You may fax your application to NES at 1-800-345-9588, but you will need to mail in the original application before the consolidation process is completed.
Q. Will consolidation affect my eligibility for future student loans?
A. No. Consolidation will not affect your eligibility for future student loans.
Q. If I consolidate now, then take out loans in future years when I'm in school, what are my consolidation options down the line?
A. If you borrow new Stafford or PLUS loans after you consolidate your existing loans, you will be allowed to add those to your consolidation loan. In most cases, you will be required to complete a new consolidation application, and a new consolidation loan will be made.
Q. How long will the consolidation process take?
A. Because of the large volume of applications at this time, the actual process will take 6-8 weeks. As we approach the June 30, 2006 deadline to lock in the current interest rates, this processing time will likely increase.
Q. Why do I need to consolidate now?
A. Interest rates have been increasing since the current student loan interest rates were set last year. There is a high likelihood that when student loan rates reset on July 1 of this year, there will be an increase in the rate. The major benefit of consolidating now is to lock in at the current low 2005 interest rate.
Q. There is only room for 16 loans on the page where I list the loans I would like to consolidate. What if I have more than 16 loans to consolidate?
A. By clicking here, you can download an extra copy of Page 2, on which you can list the additional loans you would like to consolidate.
Click here for general information on Loan Consolidation.
Click here for FAQ's on general consolidation issues.
Click here to return to In-school Loan Consolidation Information.
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