Presented by William Lindsey Proprietary Sector Representative FedLoan Servicing

Transcription

1 Presented by William Lindsey Proprietary Sector Representative FedLoan Servicing

2 Consolidation Overview Consolidation Application Process Counseling Borrowers

3 A Direct Consolidation Loan allows you to consolidate (combine) multiple federal education loans into one loan. The result is a single monthly payment instead of multiple payments. There are no application fees for a Direct Consolidation Loan, and you may prepay your loan at any time without penalty. (If you are contacted by someone offering to consolidate your loans for a fee, you are not dealing with one of the U.S. Department of Education s (ED's) consolidation servicers.) A Direct Consolidation Loan has a fixed interest rate for the life of the loan. The fixed rate is based on the weighted average of the interest rates on the loans being consolidated, rounded up to the nearest one-eighth of 1%. There is no cap on the interest rate of a Direct Consolidation Loan.

4 To qualify for a Direct Consolidation Loan, borrowers must consolidate: At least one Direct Loan or Federal Family Education Loan (FFEL) that is in grace or repayment status. Repayment status includes loans that are in a deferment or forbearance period. Loans that are in an in-school status cannot be included in a Direct Consolidation Loan, but borrowers may consolidate loans that are in an in-school deferment status. Most defaulted education loans can be consolidated, if borrowers: Make satisfactory repayment arrangements with their current loan holder(s) or Agree to repay their new consolidation loan under one of the incomedriven repayment plans.

5 Direct Subsidized Loans Direct Unsubsidized Loans Subsidized Federal Stafford Loans Unsubsidized Federal Stafford Loans Direct PLUS Loan PLUS loans from the Federal Family Education Loan (FFEL) Program Supplemental Loans for Students (SLS) Federal Perkins Loans Federal Nursing Loans Health Education Assistance Loans Some existing consolidation loans Private education loans are not eligible for consolidation. PLUS loans made to a parent cannot be combined with a dependent student s loans through consolidation.

6 Repayment can begin 60 days after the loan is disbursed, or sooner. The loan servicer will let the borrower know when the first payment is due. Note: If any loan included in the consolidation is still in the grace period, the borrower can delay entering repayment on the new Direct Consolidation Loan until closer to the grace period end date. They will indicate this when applying, and the consolidation servicer will wait to process the application until the appropriate time.

7 Available repayment plans for Direct Consolidated Loans: Standard Repayment Income Contingent Repayment Extended Repayment Income-Based Repayment Graduated Repayment Pay As You Earn Loan Balance Less Than $7,500 Maximum Loan Term (Standard & Graduated) 10 years $7,500 to $9, years $10,000 to $19, years $20,000 to $39, years $40,000 to $59, years $60,000 or more 30 years

8 gov ALL borrowers will use the new Direct Consolidation Loan process through Confirm loans for consolidation Choose consolidation servicer (FedLoan Servicing, Great Lakes, Nelnet, & Sallie Mae) Select repayment plan including Pay As You Earn IFAP Announcement mentationapproach.html

9 If the borrower has NO defaulted loans which have been assigned to the Department, they now will apply at

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11 Step 1 allows the applicants to: Select the loans to be included in the consolidation View the balance and interest rate of the new Direct Consolidation Loan Choose to consolidate during grace Select Servicer

12 Loans are displayed with Loan Type and Loan Servicer in the Select the Loans to Consolidate box. When the user scrolls over the Loan Type or Loan Servicer, more information is displayed.

13 A pop-up appears when a user clicks the Add Loans button. The dropdown within the Add Loans pop-up lists possible servicers for the user.

14 Under Servicer Selection the user can select if they are consolidating for the purposes of Public Service Loan Forgiveness (PSLF). If the user is consolidating for the purposes of PSLF, their servicer options will be restricted to the PSLF servicer. If the user is not consolidating for the purposes of PSLF, the user will select a consolidating servicer from a randomized list of servicers. Failure to check the Are you consolidating for purposes of PSLF? box does not preclude a borrower from later applying for PSLF.

15 Before selecting the repayment plan, applicants will be presented with estimated repayment information for each available plan after entering: AGI Family Size State of Residence Tax Filing Status

16 This conditional page appears when a user selects an Income Driven Repayment Plan (IBR/Pay As You Earn/ICR). Select Link to IRS to access information, essential to processing the IDR request.

17 Result of IRS Link Transferred IRS Tax Return Information will display on this second conditional page associated with selecting an IDR plan. User may re-link to the IRS. Yes/No questions are asked to verify the transferred information (more questions appear conditionally upon the user s responses). Please see the appendix for additional screen shots

18 Co-sign IBR/Pay As You Earn/ICR Request If the user selected either of the Spouse Information boxes, the spouse must co-sign the IDR Request. The spouse may return at a later time to co-sign. The incomplete Application can be accessed using the Cosign Code. Please see the appendix for additional screen shots

19 Before proceeding to the next step, applicants must review each section of the Direct Consolidation Loan Application and Promissory Note. Borrower Understandings, Certifications and Authorizations Promissory Note Borrower s Rights and Responsibilities Statement Important Notices

20 This section prompts the applicant for their information, including Permanent Address Contact Information Employer Information 2 References If a user has previously submitted Reference information in a StudentLoans.gov application (i.e. PLUS Application, Exit Counseling), that information appears in a dropdown and can be selected. Otherwise, the user may supply a new reference.

21 Applicants will be asked to review the following: Loans to consolidate Consolidated balance and interest rate Length of time for servicer to hold application due to In Grace loan* Selected servicer Selected repayment plan Transferred IRS tax information* Family size* Spouse Information* Personal information References (* = if applicable) To correct any errors, click on Edit in the appropriate section. Applicants must then Certify & Sign the application.

22 After signing the application applicants will receive a confirmation stating which servicer the application has been submitted to. The completed application (and expired/canceled applications) can be found under My Loan Documents.

23 Upon application submission the servicer must: Standard Receipt Review the application and follow-up with the applicant as necessary Send LVCs to loan holders to verify loan payoff amounts Send Loan Summary to applicant 10 business days prior to funding giving the borrower the chance to make changes or cancel the loan. After 10 business days, the consolidation servicer will proceed with funding

24 Servicer actions continued: Upon completion of the borrower confirmation period, the consolidation servicer initiates a payment request from Treasury for each loan holder / servicer Determine the applicant s eligibility for the repayment plan selected Add a loan(s) within 180 days Borrowers have 180 days after the first disbursement of their consolidation loan to add a loan(s) to the consolidation Begin servicing and report to NSLDS the new Direct Consolidation Loan

25 Upon submission of the Direct Loan Consolidation application, servicers will verify receipt with all applicants and notify him/her if any information is still needed. Standard Receipt

26 Refer students to NSLDS to determine what they owe and to whom. Advise students of the pros and cons of loan consolidation. Help students determine what repayment plan may be best for them. Inform students of the loan forgiveness programs available.

27 One monthly payment Flexible repayment options Reduced monthly payments (Due to the longer repayment period under the consolidation standard and graduated repayment plans.) No minimum or maximum loan amounts or fees May qualify for renewed deferment benefits (A consolidation loan is a new loan, with its own fresh set of deferments and forbearances.) Potential loan forgiveness eligibility (Direct Loan Consolidation by itself does not provide any potential loan forgiveness benefit.) Defaulted loans can be consolidated to regain Title IV eligibility (Must make satisfactory repayment arrangements or agree to repay under an income-driven plan.)

28 Consolidation generally does not save money Slightly higher interest rate Loss of the remainder of the grace period (Repayment begins 60 days after consolidation loan is made) Loss of favorable benefits on Perkins loans such as subsidized interest and loan forgiveness Some alternate repayment plans are available without consolidation (Extended 25-year repayment is available without consolidating if you have $30,000 or more in debt with a single lender) (Income-based repayment is available without consolidation)

29 FedLoan Servicing s Consolidation Counselor assists borrowers in deciding whether or not consolidation is the best choice and will direct interested borrowers to the consolidation application.

30 Standard communications that are sent from the time we begin servicing a borrower s loan(s) until the start of repayment. View the Borrower Communication Timeline.

31 IFAP Announcements High Level Overview of Phased Implementation Nov. 27, ntationapproach.html New Direct Consolidation Loan: Phase One Jan. 7, n.html Additional FFEL Guidance Feb. 28, Form Expiration Date Guidance - Feb. 28, orms.html Additional Guidance for Schools and Third Party Servicers March 21,

32 FedLoan Servicing/PHEAA Consolidation Department Schools: Borrowers: Nelnet Consolidation Department Schools: Borrowers: Sallie Mae Consolidation Department Schools: Borrowers: Great Lakes Consolidation Department Schools: Borrowers:

33 Public Proprietary Private/Graduate & Professional Lauren Swett Phone: Facebook.com/fedloanpublic Will Lindsey Phone: Facebook.com/fedloanproprietary Want to learn more? Contact your sector representative! Lisa Ciritella Phone: Facebook.com/fedloanprivate

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35 General summary of IDR related information submitted by initiator is displayed for the spouse.

36 The spouse must fill out the Personal Information and co-sign the IDR portion of the LC+IDR Application.