Alabama Student Loan Program | Student Loan Facts and Figures

Student Loan Facts & Figures

Student Loan Glossary	Federal Stafford Loan
Tips for Student Loan Borrowers	What's an MPN?
Types of Student Loans	Federal PLUS Loan (for Parents and Graduate/Professional Students)
Choose the Lender That's Right For You	eSign Your MPN
Loan Deferment Forms	Federal Consolidation Loan

Federal Consolidation Loan

Federal Consolidation Loan Forms

Fill out and mail the forms below to the consolidation lender of your choice. These forms are provided in the popular Adobe Acrobat™ format. If you need the free Adobe Acrobat Reader™ software, download it here. NOTE: The Federal Consolidation Loan Application and Promissory Note should be printed on 8½ x 14 inch paper.

Form	Form Type	File Size
Application and Promissory Note	Adobe PDF	(81 KB)
Application and Promissory Note	Adobe PDF fill-in	(199 KB)
Additional Loan Listing Sheet	Adobe PDF	(28 KB)
Additional Loan Listing Sheet	Adobe PDF fill-in	(73 KB)
Request to Add Loans	Adobe PDF	(51 KB)
Request to Add Loans	Adobe PDF fill-in	(74 KB)

Federal Consolidation Loan

Are you worried about repaying your student loans? If so, you should explore the Federal Consolidation Loan Program. If you have multiple lenders or have borrowed under multiple loan programs (for example, the Federal Family Education Loan Program [FFELP] and the Federal Direct Loan Program), consolidation may help you simplify repayment by allowing you to make one payment instead of a payment to each loan provider. If your student loan debt just seems a little overwhelming, consolidation may help you reduce your monthly payment. To find out more about the Federal Consolidation Loan Program and whether it is right for you, read through this list of commonly asked questions and answers.

What is a Federal Consolidation Loan?

A Federal Consolidation Loan is a loan that allows student loan borrowers to merge several types of federal student loans with varying repayment terms into a single loan.

What loans can be included in a Consolidation Loan?

Federal Family Education Loans (Subsidized and Unsubsidized Stafford, PLUS, Supplemental Loans for Students [SLS], and Consolidation).
Federal Direct Loans (Subsidized and Unsubsidized Stafford, PLUS, and Consolidation).
Federal Perkins Loans.
Federal Insured Student Loans (FISL).
Health Education Assistance Loans (HEAL).
Health Professions Student Loans (HPSL), including Loans for Disadvantaged Students (LDS).
Federal Nursing Student Loans.

You should check with your lender if you want to consolidate a HEAL. Not all consolidation lenders offer consolidation of HEAL. If you already have a Consolidation Loan and want a new one, you can combine that with another student loan that is eligible for consolidation.

Before consolidating Perkins Loans, you may want to consider the benefits of the Perkins Loan Program that you would lose in consolidation, such as the low, fixed-interest rate and the cancellation provisions. You might find it useful to talk with the school holding your Perkins promissory notes about the advantages and disadvantages of consolidation.

How can a Consolidation Loan help?

A single monthly payment may be easier to manage than making individual payments to each of your loan providers. Consolidation can help by extending your repayment period and lowering your monthly payment. The downside is that by lengthening the repayment period you end up paying more interest. The tradeoff may be worth it if your debt is more manageable.

Are there any other conditions of eligibility I should be aware of?

If you are behind on your payments or you have defaulted on any student loan, there are additional eligibility conditions. You must have already made arrangements with the holder of your loan(s) to repay the loan OR you must agree to repay your loan(s) under an income-sensitive repayment plan. If you think consolidation can help you, contact your lender as soon as possible, preferably before you become delinquent or default on any of your loans.

Defaulted loans may qualify for consolidation even if your wages are being garnished to pay your defaulted student loan. If in addition to the amount being garnished, you make three consecutive, on-time monthly payments, you may qualify for consolidation. Contact your loan holder to find out specific details.

What are my payment options?

You have several repayment schedules that can be used when repaying your Consolidation Loan. With a standard repayment schedule, your payments will be consistent throughout repayment. With a graduated repayment schedule, your payment is scheduled to change (usually increasing) over the repayment period. An income-sensitive repayment schedule sets monthly payments annually based on your total monthly income. You must provide your lender with verification of your income each year to qualify for income-sensitive repayment. If you are a new borrower after October 7, 1998, and have borrowed more than $30,000, you also have the option of an extended repayment plan, which allows for you to make graduated payments over a period not to exceed 25 years.

What are the repayment terms?

How long you're given to repay a Consolidation Loan depends on how much you owe. Your lender will take into consideration any other education loans you may have when calculating your repayment period. Other education loans are those made by an organization under a public or private student loan program exclusively for the purpose of financing the borrower's postsecondary education.

Total You Owe	How Long You Can Take to Pay
up to $7,499	10 years
$7,500-9,999	12 years
$10,000-19,999	15 years
$20,000-39,999	20 years
$40,000-59,999	25 years
$60,000 or more	30 years

What interest rate will I pay?

Except for the part of the Consolidation Loan that is repaying a HEAL, the interest rate you will pay on a Consolidation Loan is a fixed rate that is calculated based on the weighted average of the interest rates you are paying on the loans you consolidate. The interest rate will not be higher than 8.25 percent. The weighted average can be calculated by multiplying the interest rate by the outstanding balance of your loans and then dividing the combined annual interest amount by the total outstanding, then rounding to the next highest 1/8 of 1 percent. For example, you have two loans, the first for $10,000 at 7 percent and the second for $5,000 at 9 percent. The weighted average calculation would be as follows:

Loan 1:	$	10,000	X .07 =	$	700
Loan 2:	$	5,000	X .09 =	$	450
Total:	$	15,000		$	1,150

New Rate:	$	1,150	/ $15,000 = .07667
(rounded to 7.75%)

If you are including a HEAL in your Consolidation Loan, the part of the loan used to pay off the HEAL will have a variable interest rate set each July 1. The interest rate is based on a formula tied to the interest rate on 91-day Treasury bills. Your lender will be able to explain this formula in more detail if it applies to you.

You should keep the total interest cost in mind when deciding if consolidation is right for you. Some lenders offer repayment incentives to borrowers. Check with your lender to find out if you can lower your interest rate if you set up automatic withdrawal payments or if you make on-time payments for a certain length of time.

Will I still qualify for deferments?

Yes, if you meet certain conditions. If you have no other outstanding FFELP loans when you get your Consolidation Loan, you can get a deferment if:

You are enrolled at least half-time at an eligible school.
You are in a graduate fellowship program or a rehabilitation training program for people with disabilities. This applies only if the program is approved by the U.S. Department of Education.
Your financial situation is such that your lender decides it will cause you economic hardship if you have to keep paying your student loans. Your lender will follow federal regulations in making that decision.
You are looking for but not able to find a full-time job.

If you have other FFELP loans, the deferment options available to you on your Consolidation Loan are based on the ones provided by the oldest FFELP loan you consolidate.

During your deferment, the federal government will pay the interest that accrues on the part of your Consolidation Loan that repays subsidized Stafford Loans. You are responsible for the interest that accrues on the part of the Consolidation Loan that repays other student loans. You will have to make arrangements with the lender to pay your interest in installments or it will be added to the principal of your Consolidation Loan at the end of the deferment period.

Will I receive the same benefits with a Consolidation Loan?

No. Your new loan will have ONLY the benefits provided in the Consolidation Loan Program. The Consolidation Loan may not offer the same repayment, deferment, and cancellation terms as the loans you consolidate. Before getting a Consolidation Loan, you should compare the interest rates, total interest costs, total monthly payments, and cancellation and deferment provisions of each of your outstanding loans with those of the Consolidation Loan. Make sure you know all the facts before consolidating.

Can I still get a forbearance if needed?

Yes, you are eligible for the same forbearances as Federal Stafford, PLUS, and SLS borrowers. A forbearance lets you postpone or reduce your payments for awhile if you are having a hard time financially. You will need to check with your lender to see if you qualify for a forbearance.

How do I know if I can get a Federal Consolidation Loan?

If you are in your grace period prior to repayment or if you are already repaying your loans, you may qualify for a Consolidation Loan. While you are in school full- or half-time, there is no reason to consolidate. In-school deferments eliminate the need to begin repayment or to consolidate until after you get out of school.

How do I apply for a Consolidation Loan?

Applications are available from participating lenders, or you can access the Federal Consolidation Loan application above. You should only apply for a Consolidation Loan from one lender at a time. Not all lenders participate in the Consolidation Loan Program. If your lender does, you have to consolidate with your current lender unless you have more than one lender and/or your lender does not offer a Consolidation Loan with an income-sensitive repayment plan. Call your lender for a consolidation application; it does not cost anything to apply.

Checklist of steps to take if you're interested in a Consolidation Loan

Call your lender(s) to see if they participate in the Consolidation Loan Program.
If you are interested in income-sensitive repayment or a spousal Consolidation Loan, verify your lender offers the option(s).
Choose a lender.
Complete the Consolidation Loan application. Applications are available through your lender or can be printed from above on this page.
Continue your payments or ask your lender(s) for a forbearance while completing consolidation paperwork.
Follow up with your lender(s) to ensure your other loans are paid in full by the new Consolidation Loan.
Make your payments in accordance with your new consolidation repayment schedule.

KHEAA - Alabama
100 North Union Street, Suite 390
Montgomery, Alabama 36104-3762

Technical Support Center 1-800-818-2678