Student Loan Consolidation FAQ

1. What are the current 2001-2002 financial aid award year Stafford and PLUS (Parent Loan for Undergraduate Students) loan interest rates?

2. The new rates for both Stafford and PLUS loans are significantly lower than last year's rates. What is the reason for this decline?

3. What are the 2001-2002 interest rates for Federal Stafford and PLUS loans?

4. Is there a difference between the rate formulas for Federal Stafford and PLUS loans issued by banks and other private lenders and the rate formulas for loans issued under the Federal Direct Loan Program?

5. How does the July 1, 2002, rate change affect interest rates for new federal consolidation loans?

6. How are Federal consolidation loan fixed rates calculated?

7. What is the downside to reducing monthly payments?

8. When can borrowers consolidate their loans?

9. When should I consolidate?

10. Can Stafford borrowers get a better interest rate deal by consolidating during the grace period?

11. Will the July 1 rate change affect the rates on existing consolidation loans?

12. Can borrowers reconsolidate their existing consolidation loans to take advantage of the lower rates?

13. What happens to the rates for loans that are in deferment?

14. Will rates also decline for loans that are in forbearance?

15. Why do borrowers consolidate their student loans?

16. What happens to grace, deferment and forbearance options when you consolidate?

17. What kinds of consolidation programs are available?

18. How do I consolidate?

19. Can I reconsolidate?

20. Consolidate while in school?

21. What should I consider before consolidating in my grace period?

22. What special conditions apply if I am in repayment and just consolidating now?

23. What should I consider before consolidating jointly with my spouse?

24. What are the consequences of defaulting?

25. What should I consider when selecting a repayment plan?

26. What happens to the interest subsidy when I consolidate if I qualify for deferment on my new consolidation loan?

27. What about “borrower benefits” or “repayment incentives”?

28. What repayment options are available to borrowers on their new consolidation loan?

29. What are both the monthly payment and total repayment amounts if I decide to consolidate?

30. Can I pay off my consolidation loan early, and how are payments applied?

31. Who will service my new consolidation loan?

32. Are there any hidden fees or hidden costs with consolidation?

33. How long will this take, and what happens now to my loans during consolidation?

34. What about unsolicited information I receive about consolidation?

35. Can alternative or private loans be consolidated?