Factors To Consider

Why should I consolidate my student loans?

By consolidating student loans you can lock yourself into a fixed interest rate that would give you the peace of mind of knowing that your rates will never rise. You can also benefit from flexible repayment terms and various borrower benefits programs. A Nelnet Loan Advisor would be happy to discuss the advantages with you. You can contact a Loan Advisor on 1.866.4CONSOL (426.6765).

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What will be the interest rate for my consolidation loan?

Because every borrower has different circumstances there is no typical interest rate. The rate of your consolidation loan depends on the rates of the student loans you are consolidating.

Your rate will be calculated by taking a weighted average of your current rates, rounded up to the closest one-eighth of a percentage point. There is a cap on interest at 8.25 %, so this is the theoretical maximum rate.

Here is a typical example of a loan consolidation. In this example the borrower has two outstanding loans:

• $10,000 loan at 6.5% interest
• $5,000 loan at 6% interest

To calculate the weighted average of these loans we can follow these steps:

• Multiply the loan balances by their interest rates:
  • $10,000x6.5 = $65,500
  • $5,000x6 = $30,000
  • Total = $95,500

• Divide the total by the sum of the outstanding balances:
  • 95,000/15,000 = 6.36%

• Round up to the closest one-eighth of a percentage point:
  • =6.375%

In this example, the interest rate of the consolidated loan would be 6.375%.

If you have any questions about calculating your consolidation loan interest rate you should speak to a Nelnet Loan Advisor on 1.866.4CONSOL (426.6765). They will research your loan history and give you an estimate of your consolidated interest rate.

What is the current interest rate for Stafford Loans?

Stafford loans disbursed between July 1, 1998 and June 30, 2006 have a variable interest rate that resets every July. See below for current interest rates:

• Stafford loans in grace or deferment - 6.54%
• Stafford loans in repayment, including forbearance - 7.14%

Stafford loans disbursed on or after July 1, 2006 have a fixed interest rate of 6.8%. Rates are adjusted each July.

How much can I afford to pay each month on my federal student loans?

The primary benefit of consolidating your loans is that it will allow you to make reduced monthly payments when compared to your current obligations, allowing you to manage your budget more effectively.

Consolidating your loans can be an excellent strategy for reducing your outgoings after graduation. While the total amount due may be higher than your unconsolidated loans (due to the extended term of the loan) it will enable you to make much lower repayments now - while your earning power is low - with the option to increase your payments when you are more financially secure.

Are there any fees to consolidate my student loans?

No. There are no fees associated with a federal student Consolidation Loan.

Can I pay off a student loan early?

Yes. There are no penalties for paying off your student loan debt early.

If I have already consolidated my student loans, can I consolidate them again?

If you have already consolidated your student loans you will only be able to re-consolidate if you have an eligible student loan that was not included in your original consolidation, or have received a new loan since you last consolidated.

If you are eligible to re-consolidate, your new interest rate will be calculated by taking a weighted average of the interest rates of your consolidated loan and your new loan(s), as described in the example at the top of this page.

Can I change my mind after my Consolidation Loan is complete?

Before your funds are disbursed you will have a 2-week cooling off period. During this time you are free to change your mind. You should bear in mind, however, that your Consolidation Loan Agreement and Promissory Note are legally binding contracts. Once the funds have been disbursed your old loans will no longer exist. By signing the documents relating to your consolidation loan you are agreeing to the terms of the loan. Therefore, you should be certain you want to go ahead with your consolidation before signing any agreement.

What lender should I consolidate with?

To determine if you are eligible for consolidation you should speak to your lenders. If all of your loans are with one lender you must start there.

If your loans are taken directly from the Department of Education, or if you have loans from multiple lenders, you can use any consolidation service.

To access information about your current loans and lenders you should visit the National Student Loan Data System (NSLDS).

For professional consolidation advice you should speak to a Nelnet Loan Advisor on 1.866.4CONSOL (426.6765).

How long does it take to consolidate my loans once I submit my application?

Once your completed application has been received the consolidation process usually takes 30-45 days. However, you can help speed up the process by using an online application and e-signature.

Which federal student loans can I consolidate?

All federal student loans are eligible for consolidation. Federal student loans are guaranteed student loans offered in partnership with schools and financial institutions. Federal student loans are predominately made up of these primary loan types:

• Stafford (Subsidized)
• Stafford (Unsubsidized)
• PLUS
• Perkins

Click here for a complete list of federal student loans that qualify for consolidation

When can I consolidate my federal student loans?

You are eligible for a federal Consolidation loan during periods of:

• Grace - The specified period of time between the date you graduate or drop below half-time status and the date loan repayment begins.
• Repayment - The time during which you’re actively making payments towards an education loan.
• Deferment or Forbearance
• Deferment - A period in which you may qualify to suspend student loan payments.
• Forbearance - Temporary postponement of payments or smaller payments.
• Some periods of delinquency - If your loan is in default status, you must be in repayment on your defaulted loan (that is, three voluntary on-time full monthly payments) or have agreed to repay the consolidation loan under an income-sensitive repayment schedule.

*Note:* Nelnet does not accept defaulted loans even if you have been returned to good standing with your current lenders. If you have a question concerning a formerly defaulted loan, please contact a Nelnet Consolidation Loan Advisor at 1.866.4CONSOL.

What are the current interest rates on consolidation loans?

The interest rate for a consolidation loan will vary from person to person, as it is calculated by taking a weighted average of the borrower’s current interest rates and rounding up to the closest one-eighth of a percentage point.

Various incentive programs used to reward on-time payment may also affect your rate. For example, When you e-sign your application online Nelnet offers a choice of either a 1% interest rate discount after 36 on-time payments have been made or a 3.33% reduction in the balance of the principal after 30 on-time payments have been made. Nelnet also offers a .25% interest rate reduction for borrowers who make automatic payment.

If you choose not to e-sign your application you will automatically receive the 3.33% principal reduction option after 30 on-time payments. You must maintain a valid e-mail address to be eligible for this option.

If you have questions about calculating your consolidation interest rate, please contact a Nelnet Loan Advisor on 1.866.4CONSOL (426.6765). They will research your loan history and estimate your consolidation interest rate for you.

What is a Private Student Consolidation Loan?

Private loans are credit-based alternative loans for families who require educational funding in excess of the amount allowed under federal loan programs. The federal government does not guarantee these programs and does not subsidize the interest rates. U.S. citizenship and credit history may affect eligibility. Borrowers receive the benefits of Nelnet’s high quality loan servicing performance, including Internet access to individual account information, low interest rates, flexible repayment options, and competitive borrower benefit programs. Many families find Nelnet’s Private Student Consolidation Loan an attractive alternative to depleting home equity or utilizing high-interest credit cards.

What are the interest rates on Private Student Consolidation Loans?

The interest rate for Nelnet Private Consolidation Loans may vary on a monthly basis. The rate will be based on the Prime Rate published in the Wall Street Journal’s Money Rates section on the first business day of each month plus a margin of up to 4.75%. Your rate will depend upon your circumstances.

Are there any fees associated with applying for a Private Student Consolidation Loan?

No. There are no fees to apply.

Can a Private Student Consolidation Loan be paid off early?

Yes. There are no prepayment penalties for early repayment.

How long does a Private Student Consolidation loan typically take?

It is expected your loan application can be complete in approximately 60 days.

What personal information do I need to supply to Nelnet to complete my Private Student Consolidation Loan?

Proof of income/employment (one of the following):
Copies of the two most recent pay stubs and last year’s W-2
• If self-employed, most recent 1040 with schedule C, and/or E, and/or F (must be signed copy)
• If retired, last year’s 1099, or Social Security or pension statement of benefits

• Proof of other monthly income (if applicable):
  • Alimony
  • Child Support
  • Separate Maintenance Income
  • Other Income Listed on Application

• Loan payoff information:
  • Current loan payment statements from your lender(s)
  • Proof of identity (Provide one of the following forms of ID):
  • State issued ID
  • Military ID
  • Driver’s license
  • Passport