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(GEN-99-17) (GEN-99-17) Interested in saving your students time and money? Have you heard your students gripe about not knowing who holds their loans, how much they owe or who to call for help? Let Direct Loan Consolidation be a tool for you to help your students!

IFAP
SFA Information for Financial Aid Professionals
U.S. Department of Education

DCLPublicationDate: 6/1/99
DCLID: GEN-99-17
AwardYear:
Summary: Interested in saving your students time and money? Have you heard your students gripe about not knowing who holds their loans, how much they owe or who to call for help? Let Direct Loan Consolidation be a tool for you to help your students!


June 18, 1999

GEN-99-17
Dear Colleague:

Interested in saving your students time and money? Have you heard your students gripe about not knowing who holds their loans, how much they owe or who to call for help?

Let Direct Loan Consolidation be a tool for you to help your students!

In-School Consolidation

· Students who consolidate loans in an “In-school” period receive a lower interest rate. This benefit, offered only by Direct Consolidation Loans,saves your students money!

· Students who consolidate In-school also receive a six-month grace period on ALL loans being consolidated!

[[This file contains the "In-School Consolidation Savings" in Portable Document Format (PDF). It can be viewed with version 3.0 or greater of the free Adobe Acrobat Reader software.]]


In Grace Consolidation

Borrowers who do not qualify for an In-school consolidation (including those with only FFEL* and other Federal Education Loans) can still enjoy the In-school interest rate benefit by consolidating during their grace period.

* NOTE: Borrowers with only FFEL loans must be unable to obtain a Federal Consolidated Loan OR be unable to obtain one with acceptable income-sensitive repayment terms or interest rate.

One Lender and One Monthly Payment!

With only one lender to deal with and one monthly bill, your students will find it easier than ever to manage their debt.

Flexible Repayment Options

One size does NOT fit all! Direct Loan Consolidation offers students many convenient and hassle-free ways to repay their loans. Plans such as the Graduated Repayment Plan, Extended Repayment Plan and Income Contingent Plan are made to be flexible so that they meet the different and changing needs of borrowers.

Weighted Average Interest Rate – Applications received after February 1, 1999 have a fixed interest rate calculation.

Weighted Interest Rate = Weighted average of the interest rates on the loans being consolidated, rounded to the nearest higher one-eighth of one percent. The rate will not exceed 8.25%.

Four Steps to Calculate the
Weighted Average Interest Rate


Step 1: Multiply each loan by its interest rate to obtain the “per loan weight factor”.
Step 2: Add the per loan weight factors together.
Step 3: Add the loan amounts together.
Step 4: Divide the “total per loan weight factor” by the total loan amount and then multiply by 100. This will give you the actual interest rate. *(Round to the nearest higher 1/8th percent)

Total per loan weight factor X 100 = Weighted Average
Total loan amount Rate *



No Minimum or Maximum Loan amounts OR Fees!
Direct Consolidation Loans do not exclude anyone based on the size of their loan debt! In addition, it costs NOTHING to consolidate.

Who is eligible?

In-school borrowers

· Are enrolled at a Direct Loan school at least half-time AND include an FFEL or Direct Loan in an in-schoolperiod. A loan is considered In-schoolif it has never entered repayment

· Include at least one Direct Loan if attending a non-Direct Loan school

Out of school borrowers (including those in grace)

Have at least one FFEL* or Direct Loan

*Borrowers with only FFEL loans must be unable to obtain a Federal Consolidated Loan OR be unable to obtain one with acceptable income-sensitive repayment terms or interest rate.

Got Questions? We’ve got answers!

Please contact us if you have any questions or need additional information by:

· phone at 1-800-557-7392 (or 1-800-557-7395 TDD)

· e-mail at
loan_consolidation@mail.eds.com

· website at
www.ed.gov/DirectLoan/. Direct students towards this site to calculate repayment amounts and apply electronically.


Sincerely,


Denise Leifeste
Direct Loan Consolidation

Last Modified: 06/22/1999