Applying for a Direct Consolidation Loan
The Direct Consolidation Loan Web site (http://loanconsolidation.ed.gov/index.html) contains:
- Information to help you decide whether or not consolidation is a good choice for you
- A list of all loans eligible for consolidation
- An online calculator to help you estimate what your consolidation loan interest rate will be and how much your loan payment might be under different repayment plans
- A glossary to help you understand terms that pertain to consolidation
Once you've made the decision to apply for a Direct Consolidation Loan, check out this general overview of the Direct Consolidation Loan application process:
1. Gather Information About All of Your Loans
You need to list all of your loans (including those you may have decided not to include in consolidation), so collect billing and interest statements, lender Internet addresses, and your coupon book for each loan.
2. Apply for a PIN
Completing an online application includes printing, signing, and mailing a promissory note or signing a promissory note online (e-sign) using a Personal Identification Number (PIN). To obtain a PIN, you can go to the Federal Student Aid PIN Web site (http://www.pin.ed.gov/PINWebApp/pinindex.jsp).
3. Complete an Application
You have three application choices:
- Apply online (https://loanconsolidation.ed.gov/AppEntry/apply-online/appindex.jsp). Be sure to check the helpful online application tips provided on the Web site
- Apply over the phone, if you have only Direct Loans (800-557-7392)
- Apply with a paper application. You can either download the application package from the Internet or request an application packet via phone (800-557-7392) or email (loan_consolidation@mail.eds.com)
4. Loan Application Is Reviewed
The processing center reviews your application information to confirm the information you have submitted on your application.
5. Loan Holders Are Contacted
The processing center collects information about current balances and interest rates from each of the lenders for each loan you include in consolidation.
6. IRS Is Contacted (Only if you choose the Income Contingent Repayment [ICR] plan.)
7. Loan Statement Generated
A list of loans eligible for consolidation and their current balances is sent to you for review. You have 10 days to review the information for accuracy and return with any adjustments.
8. Loans Are Paid Off
If there are no changes, the federal government originates a consolidation loan and pays off your individual loans. (Each of the lenders included in consolidation should also send you a separate notification that your loan(s) with them has been paid.)
9. The Direct Loan Servicing Center (DLSC) Sets Up Your Loan Account
The DLSC sends information about loan repayment and your first consolidation loan bill.
Continue Repaying Your Loans
Keep in mind that the whole consolidation loan process can take between 60 and 90 days and you are responsible for continuing to make payments on your individual loans until you are notified that they are paid off. If you are having trouble making payments, ask your lender(s) about deferment and forbearance options. Allowing any of your loans to go into default can have far-reaching negative consequences.
Consolidation Loan Application Status
At any time, you can check the status of your application by logging on to the Direct Consolidation Web site with your PIN. If you need to change any information on your loan application, you can call, email, or send changes in the mail (name and Social Security Number changes must be made in writing).
Consolidating your student loan debt is a great idea in many cases. Take the stress out of sending out multiple bills and keeping track of multiple accounts; apply for a Direct Consolidation Loan today.
About the Author:
Judi Sandall is a graduate of the State University of New York, with a BA in English Literature. She is a technical writer and editor who worked in student financial aid for over 20 years.
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