The current student debt situation has become out of hand, and the government is beginning to understand the implication of debt on the future of individuals who have immediately graduated. Since most graduates don’t have the finances to repay the loan on the previously agreed terms, they have the ability to consolidate their loans and pay them off on newer and more favorable terms.
Applying For A Consolidated Loan
When you consolidate student loans, the federal government pays off the entire amount in turn for a larger but singular amount. Considering the current situation, there are many students who favor the loan consolidation approach but are not aware of what the procedure entails.
Application Review
Once you’ve filled out the required applications and submitted them to the relevant authorities, your application will be input into the system. Before an application is sent for review, it has to be signed, edited, and completed. A completed application is then assigned a number which will serve as its identifier.
Loan Holders
The next step in the application review will be to contact the loan holders and verify whether or not the applicant is eligible for loan consolidation. Details such as current balances, accrued payments, and collection costs will be taken into account.
The loan verification process may either be carried out electronically or through a loan verification certificate which is sent to the original loan holders. The loan verification services needs to be filled out and returned to the authorities within 10 days.
Loan Statement
Once the verification certificate has been received and the loan holders have certified the final balanced required to be paid off by the applicant, the concerned body will send you a statement which will contain details of all loans that are being consolidated. The applicant is then provided with 15 days in order to scrutinize the statement and look for any discrepancies in the amount. If a response is not received within 15 days of the issue of statement, the lender will proceed with the application.
Pay Offs
Once all the numbers have been verified and no errors have been found within the statement, the lender will start paying off all loans that were included in the consolidation statement.
As each loan holder is paid off, they are liable to send the applicant a notice of repayment which proves that the loan has been paid off in full. Any underpayment and overpayment issues are resolved at this point by the federal servicer.
Account Set-up
Now that all previous matters have been resolved, the feral loan officer will set up a new account for the amount that has been paid off on behalf of the applicant. This means that at this point, your loan has been consolidated successfully.
A welcome letter which contains details of the repayments to be made to the account is then sent to the applicant.
The student loan consolidation process typically takes 60 to 90 days from its beginning to completion. Whether or not you consolidate your student loan is a decision that needs to be based on numbers and your current financial situation. If you feel that you have the disposable income to pay off the loans in the time that they are due, then consolidation may not be a good idea.
When you consolidate your loans, you will be paying more than the originally due amount over the entirety of repayment. The monthly payments however will be relatively small because they will spread out over a longer period of time.
Sources
http://www.loans.ucla.edu/howto/consolLoans.html
http://www.loans.ucla.edu/repayment/loanconsolidation.html
http://loanconsolidation.ed.gov/appstatus/saftrapply.html
http://loanconsolidation.ed.gov/loanholder/lconslproc.html
http://www.wfu.edu/finaid/loan-consolidation.html
