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Loan
Consolidation Information for Federal Student Loan Borrowers
STOP! To successfully research repayment options (such as loan consolidation) borrowers should prepare themselves by accessing their current loan information first:
FIND OUT WHAT KIND OF LOANS YOU HAVE
Debt Summary
(summarizes the borrower's federal student loan debt)
Contact each lender for the following information:
- A copy of your Promissory Note for each loan (review the loan benefits for each loan)
- Lender address & phone per loan
- Interest rate per loan
- Amount due per loan
- Account number per loan
Ways to contact the lender(s):
-
Federal Perkins loans lent by Cal Poly: www.ecsi.net.
- Federal Perkins loan lent by another school: contact that school.
- Federal Stafford loans: refer to the Debt Summary link for contact information.
- All other federal loan types: refer to the Debt Summary link for contact information.
IMPORTANT: Only federal student loans can be included
in a federal loan consolidation. Cal Poly Institutional loans, Robert Noyce Scholarships/Stipends, and/or alternative loans lent through a bank cannot be included in a federal consolidation loan.
WHAT IS A FEDERAL CONSOLIDATION LOAN?
A
federal consolidation loan is a loan used to pay off existing federal student
loans. It is a way to extend a repayment period for up to 30 years - resulting in lower montly payments. Unless the borrower was disbursed a Direct loan (subsidized or unsubsidized), he/she must be out of school to be eligible for a federal consolidation loan. Note: Cal Poly does not participate in the Direct loan program.
There are two federal consolidation loan programs. For a borrower to determine which they prefer to utilize, the following should be considered:
- Federal Perkins loans cannot be consolidated unless another federal loan type is included. Ask the potential Consolidation Loan lender(s) for details.
- Borrowers who extend their repayment period to secure lower monthly payments will pay more in interest over the life of the loan.
- Borrowers attempting to consolidate their Stafford federal loans during a grace period (defined as the period of time between dropping below half-time enrollment and the first payment coming due) should ask the potential consolidation lender(s) if doing so will ensure a lower consolidation loan interest rate.
- Borrowers should ask the potential consolidation loan lender(s) to summarize which of the federal Stafford and/ or federal Perkins loan cancellation benefits will be forfeited upon consolidating. Important: The federal Perkins loan program has a series of cancellation benefits that a borrower should review before consolidating. To do so, contact the Perkins loan billing service, ECSI: www.ecsi.net.
- Some Stafford loan and consolidation loan lenders may offer interest reduction incentives. This means that depending on the way payments are received, the loan lender may offer interest reductions. Borrowers are advised to compare the incentives offered by their current Stafford loan lender and their potential consolidation loan lender to determine which program offers the most in potential interest savings.
- Stafford loan borrowers who have more than $30,000 in Stafford loan debt, and borrowed their first Stafford loan on or before October 7, 1998, may qualify for an extended repayment option. The option provides a 25-year repayment period. This may reduce the borrower's monthly payments without having to consolidate the loans. Borrowers wanting more information should contact their Stafford loan lender.
- Borrowers in default (due to non-payment) may consolidate their defaulted loan(s), however, eligibility varies per consolidation loan program...
- FFELP Consolidation Loan lenders may require 3 months of payments before allowing a defaulted loan to be consolidated;
- The William Ford Direct Consolidation Loan program may allow the borrower to include a defaulted loan in a consolidation immediately, but to do so the borrower may need to sign up for the Income Contingency Repayment Plan (ICR).
- Borrowers who are denied a consolidation loan -for any reason- should contact the Cal Poly Repayment Counselor for assistance, as there may still be a way to obtain a consolidation loan, or benefit from another repayment option: JDay@calpoly.edu (please include the last 4 digits of your ID# with all correspondence).
FEDERAL CONSOLIDATION LOAN PROGRAMS:
FFELP Consolidation program
Lent through a bank
(For convenience, Cal Poly's lender list link is supplied below)
William Ford Direct Consolidation Loan program
Lent through the Department of Education
HELPFUL LINKS:
Cal Poly lender list
Note: This link will take you to the a web site sponsored by Cal Poly's Financial Aid Office. Although the lender list is geared towards borrowers who are seeking a Stafford loan lender, it can also be used by borrowers seeking a FFELP Consolidation Loan lender.
Teacher
cancellation provisions
For federal Perkins and federal Stafford loan programs
Federal student loans that can be consolidated
Loan rehabilitation (credit repair)
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