Meharry Loan Consolidation Primer

[1] you graduated before July 1st 2005 and:

	a. consolidated b. did not consolidate c. did not consolidate with a single or multiple lender

And Consolidated:

Consolidating before the rise in interest rates was a magnificently astute and financially savvy move, which may save you tens of thousands of dollars depending on your loan balance. Due to the overwhelming volume of consolidations in the months immediately prior to July 1st 2005, some borrowers who consolidated prior to the July 1st rate increase, may experience the higher post-July 1st rates for a period of time. As reported in the national press, some lenders, including Sallie Mae and Citibank sent computer generated letters to borrowers who completed and submitted their consolidation applications prior to July 1st 2005 announcing the new higher post-July 1st 2005 rates. The nationwide consolidation processing system was not designed nor staffed to handle the quadrupling of volume experienced. A consolidation loan may take as little as a few days, weeks or several months to process, depending on how quickly a borrower's lender(s) return the LVC (Loan Verification Certificate). The LVC is the official document that tells the consolidating company the loan payoff amount and interest rates. Upon receipt of the LVC the consolidating company pays off the existing loan and the loan is then officially consolidated. This process was overloaded in both the request for the LVC and response to the LVC so it is likely some borrowers experienced delays. However, if the application was completed and received appropriately before July 1st 2005, once the processing has been completed your interest rates should reflect pre-July 1st 2005 rates.

Even with processing delays, pre-July 1st 2005 consolidation was a superb, most likely once-in-a-lifetime opportunity which may save borrowers who took advantage of consolidation thousands or tens of thousands of dollars. Based upon the maximum Stafford of $189,125 of which $155,125 is likely to be in “unsubsidized” loans where the interest is paid by the borrower. An additional month of interest at the post-July 1st 2005 rates plus the interest generated on this amount would cost the borrower about $0.03 per day, $1.01 per month or $12.04 per year. Pre-July 1st 2005 consolidation savings in comparison to post-July 1st 2005 rates for this maximum loan amount would total $72,140.75.

If the process took an additional two months, the post-July 1st 2005 rates plus the interest generated on this amount would cost the borrower about $0.066 per day, $2.01 per month or $24.00 a year. Savings would total $72,018.70 over post-July 1st 2005 rates. As these examples demonstrate, the cost of a processing delay is a small price to pay for such extraordinary savings. The actual savings would be more dramatic when borrower discount benefits such as the Meharry Loan Consolidation Program 1.25% discount are applied.

For those who consolidated with the Meharry Loan Consolidation Program, the consolidation team of counselors and processing professionals are aware of the situation and continue to work to assure that Meharry borrowers receive the correct rates. There should be no additional expense for Meharry Loan Consolidation borrowers.

Additional To Know and To Do List:

DO NOT IGNORE ANY LETTER OR NOTICE FROM YOUR LENDER OR SERVICER. Immediately reply and contact your lender/servicer or consolidation counselor to verify your situation and next steps. Always be sure that your lender/servicer is notified of any change in your status and contact information.
Should you wish to postpone repayment, you should review deferment/forbearance eligibility criteria, qualifications and procedures with your lender/servicer or consolidation counselor and be sure to request and submit your deferment or forbearance application as soon as your consolidation has been completed.
Make sure that you understand and confirm, in writing, the criteria and procedures for any “borrower benefits” you have been promised. Remember virtually all “borrower benefits” provided by lenders are subject to change without notice.
Should you need assistance, please contact your servicer’s customer service office or an Meharry Loan Consolidation Program personal consolidation counselor. The complexity of student loan consolidation is such that you should never assume and always confirm and verify (in writing) any questions you have with your lender/servicers or your consolidation counselor.