It is certainly a daunting task to deal with 27 different student loans. Consolidating your Stafford student loans requires you to be very organized.
Follow these three steps to consolidate Stafford loans:
- Organize your loan information and classify each loan by type
- Consider the pros and cons of federal loan consolidation
- Review the Dept. of Education's information and forms
1. Organize Information & Classify Your Loans by Type
Pull together the information about each of your 27 Stafford loans. I recommend that you make a chart with the following headlines:
|Loan||Loan Type||Loan Servicer Name, Address, & Phone||Acct No.||Est. Payoff Amount||Int. Rate||Monthly Payment||Loan Balance|
The first place to look is in your (I hope) well-organized file system, where you should have a copy of all the original loan documents and your latest statements. If you are missing data then you can connect on the National Student Loan Data System (NSLDS) for students. This system requires that you login and obtain a PIN number which is available on a link in the system. A third source of information is a copy of your credit report, which should have a list of all of your federal Stafford loans, the lending institution and the monthly payments.
You mentioned you may have either Subsidized Federal Stafford Loans or Unsubsidized (including Non-subsidized) Federal Stafford Loans.
The Dept. of Education's Direct Loan Consolidation program defines general eligibility as follows:
"To qualify for a Direct Consolidation Loan, borrowers must have at least one Direct Loan or Federal Family Education Loan (FFEL) that is in grace, repayment, deferment or default status. Loans that are in an in-school status cannot be included in a Direct Consolidation Loan".
There are other mitigating factors, including defaults and previous consolidations, that may or may not affect eligibility for consolidation. In addition there is a new student loan consolidation program, the Special Direct Consolidation Loan program, which is quite complicated and looks at your other loans, in addition to any Stafford loans you have, in order to determine eligibility. Therefore, it is very important to first establish the exact types of loans which you have and which program you can qualify for. For example, by entering the Direct Consolidation Loan program you will jeopardize your eligibility to the Special Direct Consolidation Loan program.
Any steps you take should be done carefully and only after consulting with the Dept. of Education.
2. Pros and Cons of Stafford Loan Consolidation
The most obvious pros for you are:
- Simplifies the billing process and makes it easy to keep track of your loan balances and payments.
- Arranges a regular payment plan, coming out of forbearance.
- Extends the period where you can make lower monthly payments.
- Offers possible interest savings, if you have variable interest loans.
Some negative aspects of consolidation may be:
- Loss of future consolidation rights.
- Extension of the life of loan and your overall financial costs.
3. Review the Dept. of Education's Information and Forms
As previously stated, consolidating Stafford Federal Student Loans can be a daunting task. Your prime source of information should be the Department of Education's, Federal Student Aid, Loan Consolidation Web site.
This site will provide you with many details regarding eligibility, types of repayments possible, including forbearance, income contingent repayment plans, and income based repayment plans.
While it is possible to do an on-line application you can also download the pertinent forms and use other tools, such as their on-line calculator. If you need help completing the application you may call their number 1-800-557-7392 or for the hearing impaired the TDD is 1-800-577-7395.
To consolidate your Stafford federal student loans successfully, you must first organize your information and then contact the Dept. of Education to verify your loan types. Doing so will determine the loan consolidation program that will be most appropriate for you.
I hope this information helps you Find. Learn & Save.