Meharry Loan Consolidation Primer

[3] you will continue in school after July 1st 2006 and:

	a. you have completed in-school consolidation with additional outstanding eligible unconsolidated loans b. must choose a “blended” single consolidation or two or more new “separate” consolidations c. you have a single or multiple FFELP Stafford lenders/holders and have NOT Consolidated

Must Choose A “Blended” Single Consolidation Or Two Or More New “Separate” Consolidations

As a student continuing beyond July 1st 2006 you should be very much aware that there are few if any reasons and virtually no valid economic rationale not to consolidate. Given the state of higher education financing with potential rate increases and legislative changes that may substantially increase the cost of your education you are now faced with the decision of what to do next.

Having consolidated some of your loans and having loans for which you will want to consolidate before July 1st 2006 you will now most likely be faced with deciding between two primary options:

Option No. 1 – Combine or add (if within the 180-day period) your in-school consolidation loans with your unconsolidated loans to create a new “blended” single consolidation.
Option No. 2 – Keep your in-school consolidation loan in tack and consolidate your unconsolidated loans into a new “second” in-school consolidation. This option will leave you with two separate consolidations.

With this second option note that, as with the Meharry Loan Consolidation Program consolidation programs/lenders/servicers should allow you to combine payments for multiple consolidation accounts into a single monthly check/payment.

The Meharry Loan Consolidation Program has prepared a review of these options, One Consolidation, Two Consolidations, Three Consolidations, More. . This review also serves as a guide, which provides comparison examples, analyses, explanations of and tips on important economic and money management concepts, tools and habits that are important to know and understand for you to make an informed decision.

Whether you choose to use Option 1 or Option 2 it would be difficult to go wrong. What is key is that you understand consolidation and make an informed decision about taking advantage of it because this may be your last opportunity to lock in such borrower favorable terms. After June 30th 2006 this magnificent opportunity to consolidate at fixed low interest rates and do in-school consolidation may no longer exist.

There are few if any and virtually no financially valid reason not to consolidate. The Meharry Loan Consolidation Program recommends that unless you and/or your loans meet the criteria for loan cancellation, discharge, forgiveness or repayment you should consolidate your student loans immediately.

You Have A Single Or Multiple FFELP Stafford Lenders/Holders And Have NOT Consolidated

Definitions: FFELP Stafford loans are government-backed loans from banks or commercial lenders. Direct Stafford loans are loans that are borrowed directly from the government.

Unless you have a carefully considered, documented and verified reason NOT to consolidate, then you should do an in-school consolidation now and protect your low interest rate eligible Federal students loans from potential expensive rate increases and programmatic changes!

If you have unconsolidated student loans, you should educate yourself and identify your individual options now! Continuing students will have to abide by any legislatively authorized program changes, pay prevailing rates on subsequent post-June 30th 2006 loans and consolidations.

”Consolidating at current rates on whatever loans you already have could save you a small fortune in interest.” -- Student Borrowers Must Consolidate Now

Terry Savage, registered investment advisor, nationally known expert on
personal finance and commentator on CNN, CNBC, PBS, and NBC.

You must have two different lenders to have consolidation choices. Under current (July 1st 2005 – June 30th 2006) regulations, if all of your eligible Federal loans are with the same lender and that lender offers loan consolidation, you have no choice and must consolidate with that lender. This is known as the “single-holder rule.”

This rule does not apply if all loans are with the Federal Direct Loan Program, hence you may wish to consider a “Super Two-Step” strategy where you first consolidate your single lender loans with the Direct Loan Program and then reconsolidate with the consolidation lender of your choice.

It has been reported that a number of students with single FFELP lenders have been able to consolidate their loans through the Federal Government's Direct Loan Program (http://loanconsolidation.ed.gov/) - (1-800-557-7392). Not all lenders agree with this interpretation. If your lender does not, and you have loans with only one lender, you may want to contact the Federal Direct Loan program or speak with another lender. However, your options may be limited. Some financial aid offices have advised students of this “Super Two-Step” approach. This strategy has been successfully utilized by hundreds of students, including many Meharry members.

The “Super Two-Step” strategy provides you with the advantage of consolidation lender and borrower benefit choice. The Direct Loan Program offers only a single borrower benefit; a 0.25% rate discount for automatic debit payment. More robust borrower benefits such as the Meharry Loan Consolidation Program’s immediate 0.75% (immediate 0.50% interest rate reduction at disbursement plus 0.25% for auto debit) or 1.25% (1.0% after 36-regular on-time regular payments plus 0.25% for auto debit) which will never be lost once earned and may reduce your Post-July 1st 2005 rate to as low as 3.50% are available from FFELP consolidation lenders.

Additional To Know and To Do List:

Students with all of their Stafford loans with a single FFELP lender at non-Direct lending schools can request FFELP in-school consolidation by requesting that their lender/holder put their loans into repayment.
When doing an in-school consolidation with a FFELP lender, in order to guarantee the lower in-school rate it is imperative that you follow the proper sequence of steps:

1st) Submit an In-School Consolidation Request for Early Repayment waving the grace period on Stafford student loans;

and

2nd) Place the Stafford loans into an in-school deferment status prior to the processing of the Consolidation Loan.

Do remember that the U.S. Department of Education authorization allowing private FFELP lenders to provide “in-school” consolidation as of this writing (January 2006) has been extended and is set to expire March 31st 2006.

Do remember that FFELP lenders are not required to grant a borrower’s request to enter repayment status early thus negating in-school consolidation for those students with only one FFELP lender.

Some lenders have been reported to have already begun denying “in-school” consolidation. In this case, it is recommended that you use the “Super Two-Step” strategy and first consolidate with the Federal Direct Consolidation Program and then reconsolidate with the Meharry Loan Consolidation Program or the lender of your choice.
In-school single FFELP lender consolidation should be a last resort approach to locking in rates because this approach entombs the single lender dilemma. Without multiple lenders, the student borrower no longer has consolidation lender choices or discount options unless they are able to consolidate with the Direct Program or obtain new eligible Federal Stafford loans from a new, different independent FFELP lender who will not sell their loans to their current single lender or the Direct Program.

For those who wish to have consolidation lender and discount choices and options upon graduation, you should secure a different new independent lender who will not sell your remaining Stafford loan(s) to your current single lender. Should you need a recommendation for an independent second lender please email info@Meharryloanconsolidation or info@easnetwork.com.

FFELP in-school consolidations forfeit the six-month grace period for repayment following graduation. However, the low fixed interest rate and consolidation deferment and forbearance options remain available.

Private/alternative loans cannot be included in a Federal consolidation loan and private/alternative loan lenders do not qualify as second lenders for Federal loan consolidation.

FFELP lenders and programs including our Meharry Loan Consolidation Program (1.800.741.4704) and the Direct Loan Program (http://loanconsolidation.ed.gov/) - 1-800-557-7392 offers Federal student loan consolidation. Before completing a consolidation application be sure to review the Meharry Loan Consolidation Program Guide, Consolidation Discounts - TOO GOOD TO BE TRUE? (http://www.Meharryloanconsolidation.com/primer_3.html), which will assist you in understanding the fine print of discount benefits. Also visit When Considering Student Loan Consolidation - Keep in Mind (http://Meharryloanconsolidation.com/summary.html) for information and answers to important consolidation questions.

You want to also be sure that you fulfill all necessary requirements attendant to your status, i.e. begin repayment upon graduation, file for deferment or forbearance.