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Frequently Asked Questions (FAQ)

Financial Aid
  • Am I eligible for financial aid?
  • When do I start the process?
  • What is FAFSA and where do I find it?
  • How can I increase my chances of getting more aid?
  • How do I get the money?
  • How do I know if I’m a dependent student?
  • Which loans require credit checks?
  • When do I start repayment of my loans?
  • Is each loan separate, or do they just roll them all into one account?

  • Consolidation Loans
  • Why should I consolidate my student loans?
  • Won’t my total cost increase if I extend repayment to 30 years?
  • Can my parents consolidate their Federal PLUS loans with my student loans?
  • How is the interest rate determined?
  • Is the interest tax deductible?
  • How do I know what my payment will be?
  • How do I apply?

  • Private Loans
  • What’s the difference between private and Federal student loans?
  • Do I need a co-signer for a Private Loan?
  • What are the rates for a private loan?
  • What is TERI?
  • How do I apply for a Consolidate Student Loans Now Private Loan?

  • Parents’ Frequently Asked Questions
  • How much should I save for my child’s education?
  • Which is better, a prepaid tuition plan or a college savings plan?
  • If savings may impact my child’s federal aid eligibility, why should I save at all?
  • How much will I be expected to contribute toward my child’s education?
  • How is EFC calculated?
  • How will contributing to a 529 impact financial aid eligibility?
  • Who should save-me or my child?
  • Who should borrow-me or my child?
  • How is a Federal PLUS Loan different from a Stafford Loan?
  • Is there a credit check required for a Federal PLUS Loan?
  • What if I’m not approved for a PLUS Loan?
  • How much does a Federal PLUS Loan cost?
  • How are Federal PLUS Loan funds disbursed?

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  • Financial Aid FAQs and Responses

    Am I eligible for financial aid?
    Just about everyone qualifies for some type of financial aid. In fact, over 8 million students receive financial aid every year. Even if you’re not a straight-A student or a star athlete, you may be eligible for more aid than you think. To see if you meet basic eligibility requirements, take our Financial Aid Eligibility Quiz. Then, complete the Free Application for Federal Student Aid to see how much aid you can get.

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    When do I start the process?
    It’s never too soon to start. There are steps you can take beginning in high school to help you prepare both financially and academically. Otherwise, you should start the year before you go to college by completing the Free Application for Federal Student Aid (FAFSA) as soon as possible after January 1.

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    What is FAFSA and where do I find it?
    The Free Application for Federal Student Aid (FAFSA) is used to determine how much aid you can receive and how much your family is expected to contribute toward your college costs. You must complete a FAFSA (or Renewal FAFSA) each you wish to be considered for financial aid.

    You can find the FAFSA form online at www.FAFSA.ed.gov, or you can get a paper copy from your school’s Financial Aid Office or your high school guidance counselor.

    To learn more about the FAFSA, see The Financial Aid Process: Completing the FAFSA.

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    How can I increase my chances of getting more aid?
    The single most effective way to increase your chances of qualifying for more money is to apply as soon as possible after January 1 of the year you wish to receive financial aid. The aid pool at most institutions is limited, and is typically awarded on a first-come, first-served basis. For more information, see our Top Tips for getting the most financial aid.

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    How do I get the money?
    Methods of distributing financial aid vary from campus to campus. Most financial aid will not be given directly to you. The majority of aid gets credited directly to your student account at the start of an academic term.

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    How do I know if I’m a Dependent student?
    If you are less than 24 years of age on December 31 of the school year, an undergraduate student, single, not in the military, have no dependents, and are not an orphan or ward of the court, then you are a Dependent student as far as the Department of Education is concerned.

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    Which loans require credit checks?
    Federal Stafford Loans do not require any credit checks. However, if your son or daughter has defaulted on a student loan, or is not making satisfactory academic achievement, they may not be eligible to obtain a new federal loan. The PLUS (Parent Loan for Undergraduate Students) Loan requires a credit check and may be denied if the parent has adverse credit history. All alternative loans have credit checks.

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    When do I start repayment of my loans?

    Federal Stafford Loans
    The borrower is not required to make any payments until six months after leaving school or going below half-time. For example, if the student receives a degree in May, but goes on to graduate school in the fall, no payments must be made because there was not a six-month lapse in schooling.
    Federal PLUS Loans
    Repayment will start usually no later than 60 days after the last disbursement. All federal loans have at least two disbursements, typically one for each school term. At most schools, the last disbursement will take place in January, and the repayment will normally start between February and March.
    Private Loans
    The repayment terms may vary, depending on the type of private loan you have.

    Is each loan separate, or do they just roll them all into one account?
    Each loan is considered a separate loan, but all federal loans under the same Social Security Number may be consolidated. A Federal Consolidation Loan is where the individual loans are paid off to create one new loan. The repayment term may then be extended to minimize the monthly payment, while maintaining the benefits of the original, separate loans. Alternative loans will not be included in a Federal Consolidation Loan.

    Consolidation Loan FAQs and Responses

    Why should I consolidate my student loans?
    Consolidation offers many benefits-even if you’re currently making your monthly payments without any difficulty.

    • You can make monthly bill paying easier with one student loan payment to one lender.
    • The rate on a Federal Consolidation Loan is fixed for the life of the loan. Federal Stafford Subsidized and Unsubsidized Loans carry variable interest rates that are adjusted annually.
    • Consolidating will help ease the pressure on your monthly budget by reducing your monthly student loan payment 10% – 60%.
    • You can save money by using your student loan payment savings to pay off high-rate debt, such as credit cards.
    • Consolidation will help your credit scores and debt-to-equity ratio, both key factors if you’re looking to purchase or refinance a home.

    See our Before and After examples for a look at what consolidating your student loans can do for you.

    Won’t my total cost increase if I extend repayment to 30 years?

    Extending the repayment period does increase total interest payments, since smaller payments are made over a longer period of time. However, there are no prepayment penalties for accelerating repayment, so you could pay off the loan in a shorter period of time and save on total interest payments.

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    Can my parents consolidate their Federal PLUS loans with my student loans?
    All loans must be under the same borrower’s Social Security Number, thus parents cannot consolidate their PLUS Loans with their children’s Stafford Loans, or vice-versa.

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    How is the interest rate determined?
    The interest rate is determined by taking a weighted average of the interest rates on all loans to be consolidated and rounding up to the nearest 1/8 of 1% or 8.25%, whichever is less.

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    Is the interest tax deductible?
    Most people can deduct interest paid on Federal Consolidation Loan. Consult your tax advisor for more information.

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    How do I know what my payment will be?
    Try our consolidation loan calculator to get an idea of the savings you can expect from a Federal Consolidation Loan.

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    How do I apply?
    Consolidate Student Loans Now makes it simple. Just fill out our easy online form. You’ll receive an e-mailed, preprinted, and fully completed loan application in your e-mail inbox within 48 hours.

    Private Loan FAQs and Responses

    What’s the difference between private and Federal student loans?
    Federal student loans are guaranteed by the Federal government, and offer attractive terms such as low interest rates, deferred repayment, subsidized interest payments and longer repayment terms. Credit checks, if required, are less stringent than for other types of consumer loans. You must complete the Free Application for Federal Student Aid (FAFSA) to be eligible for Federal student loans.

    Private loans are non-government loans offered by banks, credit unions and other lenders. These loans are not based on financial need, but rather on your creditworthiness and ability to repay. Private loans are designed to supplement federal loan programs and can be used for a wide range of education purposes, including tuition, books, living expenses and computers. The rates and terms vary by lender and borrower creditworthiness. In some cases, a co-signer is required to receive a private loan.

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    Do I need a co-signer for a Private Loan?
    Not necessarily. You may be eligible for a private loan if you have a satisfactory credit history, are employed full time and are a U.S. citizen or permanent resident. If you don’t meet the minimum eligibility requirements, you can apply for a Consolidate Student Loans Now Private Loan with a co-applicant who does.

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    What are the rates for a private loan?
    The rates vary according to the specific purpose of the loan. For instance, private loans for undergraduates carry a rate of LIBOR plus 4.65%. All Consolidate Student Loans Now Private Loan rates are based on LIBOR, plus a margin.

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    What is TERI?
    The Education Resources Institute (TERI) is a private, nonprofit institution that guarantees all Consolidate Student Loans Now Private Loans. To be eligible for a Consolidate Student Loans Now Private Loan, borrowers must be enrolled at least halftime in a TERI-approved school. Please call Consolidate Student Loans Now or your school’s Financial Aid Office with any questions about TERI-approved status.

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    How do I apply for a Consolidate Student Loans Now Private Loan?
    Consolidate Student Loans Now makes it simple. Just fill out our easy online form.

    Parents’ Frequently Asked Questions and Responses

    How much should I save for my child’s education?
    How much you need to save depends on the school your child attends. Tuition and fees at public colleges are generally lower than those at private schools. Regardless of the school, though, education costs have been rising, and are expected to continue increasing over the next decade.

    Here’s how much college funding you’ll need to save to send one child to an average four-year private or public college. Don’t let these numbers frighten you. Start implementing your college savings plans today.

    Child’s Age (Years) Average Cost Private College Average Cost Public College
    One $257,543 $118,312
    Four $222,475 $102,200
    Eight $183,031 $84,080
    Twelve $150,580 $69,173
    Sixteen $123,884 $56,909

    Which is better, a prepaid tuition plan or a college savings plan?
    A prepaid tuition plan offers a conservative approach to investing for college, and can be right program for students planning to attend a state college. And, if tuition costs increase, you win-the number of credit hours you purchased remains the same, regardless of any changes in college costs.

    The Consolidate Student Loans Now Scholar’sEdge™ savings plan is more flexible, allowing you to save for any attendance at any college. The amount you invest, plus the accumulated return on your investment, may well exceed college costs-so you’ll come out ahead.

    Both plans are tax-deferred, and allow tax-free withdrawals for education-related expenses.

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    If savings may impact my child’s federal aid eligibility, why should I save at all?
    Whether you save or not, you will be expected to contribute to your child’s education to the extent possible. If you haven’t put away any money at all, then you may have to take out loans either as part of your financial aid package or to pay part or all of your Expected Family Contribution … or both. Even though you and your child may be eligible for low-cost loans, any type of loans means paying interest whereas saving money means getting interest.

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    How much will I be expected to contribute toward my child’s education?
    To meet the cost of attendance, each school looks to the students and parents to make an Expected Family Contribution (EFC). The EFC is based on your family’s ability to pay, and is determined by need analysis derived from the information reported on your child’s Free Application for Federal Student Aid. The EFC normally includes both a student’s share and the parents’ share, both of which take into account income and assets. The total EFC is calculated using a standard formula established by law so that, regardless of the college your child attends, your EFC will be the same.

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    How is EFC calculated?
    The EFC calculation uses a standard formula based on the information reported on the FAFSA. This calculation considers family size, the number of family members attending college, whether the student is Dependent or Independent, and the family’s income and assets (both student’s and parents’), including cash, checking and savings accounts, real estate other than your family home, and investments. The difference between your EFC and the cost of admission (COA) determines your financial need.

    Because both the cost of the school and your family finances are considered, your family may qualify for more financial aid than you think.

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    How will contributing to a 529 impact financial aid eligibility?
    Although your savings will be considered in the EFC calculation, income is a bigger factor than assets. However, both types of 529 plans will impact your EFC.

    A college savings plan, such as the Consolidate Student Loans Now Scholar’sEdge plan, is considered the parents’ assets and is factored into the EFC at 5.6% so that a portion of the assets are considered in the financial aid calculation. A prepaid tuition plan, on the other hand, is considered to be the student’s asset, and reduces financial aid dollar-for-dollar.

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    Who should save-me or my child?
    While there are potential tax benefits to saving in your child’s name, there are also potential financial aid implications. Parent assets are factored into the EFC at low rate-5.6%, while student assets are assessed at 35% of assets and 50% of after-tax income over $1,750.

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    Who should borrow-me or my child?
    You should definitely investigate loans for your student first, such as the Federal Stafford Loan. These are the lowest-cost aid available and offer significant benefits such as flexible repayment, deferment and forbearance, and consolidation.

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    How is a PLUS Loan different from a Stafford Loan?
    Both loans are federally guaranteed, but the Federal PLUS Loan is made to the parents of Dependent undergraduates, while the Stafford Loan is made directly to the student-in his or her name. Other differences are:

    • Interest rates: The interest rate on a Stafford Loan is generally among the lowest available (currently 6.8%). The Parent PLUS Loan interest rate is slightly higher (8.5% as of 07/01/06), though still quite low compared to other types of consumer financing.
    • Repayment: Repayment on Federal Parent PLUS Loans begins within 60 days of disbursement whereas Stafford Loan repayment is deferred until after graduation.
    • Loan Amounts: Parents can borrow up to 100% of college education costs, including room and board, books and tuition. Federal Stafford Loan borrowing is capped at $2,625 and $3,500 for first- and second-year undergraduates, respectively (Independent students may borrow an additional $4,000), and $5,500 for third- and fourth-year students (Independent students may borrow an additional $5,000).

    Is there a credit check required for a Federal PLUS Loan?
    Yes, parents must pass federal guidelines for creditworthiness. These guidelines are generally less stringent than for other types of consumer credit, such as home equity loans and credit cards.

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    What if I’m not approved for a PLUS Loan?
    A student whose parent(s) have been turned down for a PLUS Loan may be eligible to borrow additional funds through the Unsubsidized Stafford Loan Program, subject to the school’s approval.

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    How much does a Federal PLUS Loan cost?
    The Federal PLUS Loan has a 3% government origination fee and a 1% guarantee fee, which is normally waived. Fees are taken out of the proceeds of the loan, so there is no up-front money required to obtain the loan.

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    How are Federal PLUS Loan funds disbursed?
    The school’s financial aid office will distribute the funds directly to the student in scheduled payments over the course of the academic year. All federal loans have at least two disbursements, typically one for each school term. At most schools, the last disbursement will take place in January, and the repayment will normally start between February and March.

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    Are there any prepayment penalties on the Federal PLUS loan?
    No.

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