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Updated: April 21, 2008
If you borrowed Federal Stafford loans, you are required to complete an exit interview. It is a federal financial aid requirement that you do so before you graduate. You will learn about the loan repayment process, schedules, federal loan consolidation options, deferments, grace periods and more.
At this time you have a choice of two exit counseling options:
Please bring your address book in order to provide reference information (references are only used to locate you if you move).
Bar loan application (credit check required) deadline is May 7. Bar loans are available to help cover bar exam costs, prep course fees and some living expenses while studying for the bar. See our office for more information or review the Alternative Loan information.
As of July 1, 2007, the in school option to consolidate was eliminated. You must wait until your grace period or repayment to consolidate.
There are some complex issues to think about regarding federal student loan consolidation.
If you received a 2006 summer disbursement prior to July 1, 2006, your 2006-07 Stafford loan has a variable rate, unless you consolidated it prior to July 1, 2007. For loans disbursed prior to July 1, 2006, the interest rate is variable, adjusted annually on July 1. The variable rate is based on the 91 Day Treasury Bill (as of the last auction prior to June 1) plus 1.7% during in school and grace period, or plus 2.3% in repayment, not to exceed 8.25%. The current interest rate for that variable 2006-07 Stafford loan is 6.62% in school and 7.22% in repayment. If the rate was set today, the rate would be much lower (under 3%) than it is currently. However, it is difficult to predicate what the rate might be as of July 1, 2008, and the rate could drop further or go up again by then.
Most likely if you have a variable rate loan, you will want to wait until after July 1, 2008 to consolidate and lock in the anticipated lower rate. It would be extremely unlikely that the rate would go above the current 6.22%, but if so, you may want to consolidate after graduation but prior to July 1, 2008 even though by doing so you will lose the bulk of your 6 month grace period. You may check www.bankrate.com or Student Financial Services to determine the 91 Day Treasury Bill rate (add 1.7% for in school or 2.3% during repayment). The rate is set June 1. If the rate does go up, the lender must receive the federal student loan consolidation application prior to July 1 in order to lock in the in-school rate.
If the rate goes down as expected, you want to wait until about a month to two before your six month grace period ends before consolidating so you do not lose the remainder of your grace period (consolidation loans become due within 60 days after they are booked).
You will need to decide whether to only consolidate that first year loan by itself or to consolidate it with your other two years of 6.8% fixed loans. Because consolidation uses the weighted average rounded up to the nearest one-eight of a percent, it may be more advantageous to keep the low variable rate loan consolidated separately, but you may prefer to have only one consolidation loan with all your loans together.
The interest rate for federal loan consolidation is the weighted average of all the federal loans you wish to consolidate rounded up to the nearest eighth of a percent, capped at 8.25%. The rate is then fixed for the life of the loan (up to 25 years depending upon your debt load). Most lenders, including Direct Loans (the law school uses Direct Lending), offer a .25% interest rate reduction for automatic electronic payment.
Remember, if you have variable interest rate loans, the rates will change July 1. There will be an additional .6% added to the rate after the 6 month grace period ends; the repayment rate will be based on that higher rate if you do not consolidate.
A consolidation loan comes due 60 days after it is booked.
For more information and to apply for a Direct Loan consolidation, please see www.loanconsolidation.ed.gov or call 1-800-557-7392.
If you wish to comparison shop, perhaps research Collegiate Funding Services, Sallie Mae or NELA, Key Bank, Citibank or Access Group. These are reputable organizations that have a track record in the financial aid community. There are many new companies now competing for your consolidation business. They may offer some discounted rates, but please be mindful that with many of them we have no history or knowledge of their service or practices. Some well known lenders, such as Sallie Mae and Access Group are no longer offering loan consolidation. It is possible that some of the lenders on the list above may revise their business plan and also not offer consolidation with very little or no notice due to the volatile student lending market.
The basic information for May graduates applies to your situation as well. You will receive exit counseling information at the time of your graduation. Please let us know if you have any questions regarding your situation.
If you are no longer enrolled in school, you may consolidate through Direct Lending or through another lender in the FFEL program. If you did not consolidate previously, you may consolidate during your grace period or during repayment. Your loan will come due within 60 days after it is booked. Student loans may be deferred while enrolled at least half-time. If interested in the public interest forgiveness programs, you should consolidate with Direct Loans.
Federal student loans include Stafford, Perkins, Grad PLUS, PLUS and SLS. You may consolidate undergraduate federal loans with your law school federal loans. If interested in the public interest or IBR forgiveness plans, it is not recommended that you include the parent PLUS in the consolidation (Grad PLUS is fine).
If you have a federal Perkins loan, you may wish to consolidate for the convenience factor. Please consider carefully whether or not the convenience outweighs the fixed 5% interest rate. Depending upon the weighted average, it may or may not alter the consolidated fixed interest rate. Please note that there are some cancellation options related to the Perkins loan that may benefit you if you qualify (see www.mycampusloan.com/forms/pdf/facts_disc_exit/9171.pdf). If you consolidate you will lose these cancellation benefits. You will also pay more interest over the life of the loan if you consolidate the Perkins loan because the Perkins repayment period is 10 years. If you consolidate through lenders other than Direct Loans, the subsidized interest benefit for periods of deferment will no longer exist. Depending upon when you consolidate, you may lose most of the 9 month grace period. You have 180 days in which to add another loan to your consolidation.
The Grad PLUS loan may be consolidated with your Stafford loans. The interest rate is fixed at 7.9% and consolidation will reduce the Grad PLUS rate somewhat and raise the overall Stafford rate. By how much will be dependent upon the weighted average – see Calculators below.
If you have private (credit based) student loans, you can not consolidate your private loans with your federal loans, but you may list them for total student loan indebtedness purposes – it will extend your repayment period.
Although you cannot consolidate private loans (Seattle University Law Loan/GATE, Access Group, Law Loans, Key, Citibank) with your federal loans, there are some organizations out there encouraging you to do so. We strongly advise against this because it will convert your federal loans into a commercial loan and you will lose the federal deferment and forbearance options and federal tax benefits. If you want to consolidate your private loans from different lenders together after graduation, you might consider using Key Education Resources or Collegiate Funding Services. Consolidating your private loans together does not fix the interest rate; it simply provides a consolidation of two or more separate lender bills into a single lender statement. Along with a credit check, you may end up paying origination fees and more interest or lose some deferment options that may be offered by specific private lenders, although you also may be able to find a better variable interest rate and improved repayment options.
For repayment calculators see www.loanconsolidation.ed.gov or www.finaid.org.
Please contact Student Financial Services at (206) 398-4250 or lawfa@seattleu.edu should you have any questions.