Is Consolidation Right for You?

Determine if You Are Eligible

To be eligible for federal loan consolidation:

• You must be in grace period or repayment of your student loans
• Your total student loan debt must be at least $10,000
• Your loans must not be in default
• You must have at least one loan with AHELA to consolidate
• You must not have not consolidated your eligible student loans previously or you must have one additional loan to add to your consolidation

Know the Advantages

The advantages of consolidating your student loan include:

• You will reduce your student loan payments by up to 45%
• You will only make one payment each month to one lender
• If you attended school in Arizona or are an Arizona resident, you may be eligible for AHELA's generous consolidation borrower benefits:
  • 1.00% interest rate reduction after making 36 ontime payments
  • 0.25% interest rate reduction for automatic payments

Know the Disadvantages

The disadvantages of consolidating your student loan include:

• You will extend your repayment term and lower your payments, but you also will pay more in interest over the life of your loans
• It will take you longer to pay off your loans if you make smaller payments
• When you consolidate, you will lose any borrower benefits or interest discounts you already qualify for on your existing loans

Know the Alternatives to Consolidation

Instead of Consolidating you may check out the following option:

• Want a single payment? Contact your servicer and request that you receive a single bill with a single due date.
• Have loans with multiple lenders? You may request that your lender purchase or sell your loan, in order to get all of your loans to one lender.
• Want to lower payments? You may request an income-sensitive repayment option or graduated repayment plan to lower payments.
• Want to lower payments and extend your repayment term? If you have over 30,000 in student loans taken out after October 7th, 1998, you may request an extended repayment term, allowing you up to 25 years to repay your loans, lower your payments, and keep your Stafford and/or PLUS borrower incentives.

How the Consolidation Process Works

You can now consolidate your loans with any lender. You are no longer required to consolidate with your existing lender. Shop around and make sure you are picking the best loan product for you.

Here are a few things to keep in mind:

• A federal consolidation loan interest rate is based on a weighted average of the interest rate of your underlying loans. This is a federal formula
• Interest rates will only vary based on the borrower benefits or incentives the lender offers, such as interest rate discounts and rebates
• Be sure to run the numbers and not be fooled by slick marketing. A 1.0% interest rate discount will save you more money over the life of your loan than a 10% rebate program

The consolidation process will take 30 - 90 days once you submit your application. Here is a brief outline of the process:

• We will review your application for errors and contact you if additional information is necessary
• We will send requests to your other lenders to provide us with the exact balance and interest rate
• We will calculate the exact payoff amounts of your underlying loans
• We will send your other lenders checks to pay off your loans in full
• We will add your new loan to our system
• We will notify you once your consolidation loan is complete and inform you of your first payment due date