FAFSA Loan - The Truth About FAFSA Loans: FAFSA Stafford Loans,
FAFSA PLUS Loans and FAFSA Consolidation Loans

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How your FAFSA Loans will be Consolidated

On this page you will find a summary of the script I used for Stafford loan consolidation and PLUS loan consolidation. It was different to the one that Federal Consolidation Loan company that I worked for used. Two of the things that were drummed into us was to convey a sense of urgency, and also that this was a FEDERAL GOVERNMENT program. We weren't told to make anyone think that we were the government, but if they did, it certainly couldn't hurt.

What consolidation does is combine all of someone's FAFSA loans together into a single consolidation loan with a fixed interest rate.

Consolidation Loan Interest Rates

We would first off exclaim "You are calling at the right time because the interest rates are the lowest in history!"

I guess that it would not be sensible to say that now, but you could say that interest rates are rising so lock in now as who could know what they are going to be next year. On July 1, 2006 the rate that you get on an education consolidation loan will rise substantially.

Consolidation Loan Eligibility

We would find out if they were still in school and determine their eligibility on the National Student Loan Data System (NSLDS). As an approved Federal Education Lender we were given logins to this system in order to determine eligibility for a person to consolidate education loans.

To find their record on the system, we would ask for their "student account number, which is almost always the same as your social security number." This was code for "give me your social security number!", which many people are understandably nervous about giving up to someone that they have just called.

We would verify date of birth and the last school the prospect took out loans for. This made sure that we had the right person.

If NSLDS was not up, then we could establish the following to establish if they were eligible.

1. balance? A balance below a certain amount, e.g. $7500, is not worth consolidating.

2. rate (to determine if Federal or private loan)? Many people don't know the difference! Federal education loans have certain rates within any particular period. Private loans could have any sick figure usually higher than a federal loan.

3. currently in repayment? (If not---are you in school, your grace period, forbearance or hardship deferment?) If someone wasn't in repayment then they probably couldn't consolidate their education loans.

4. current lender? Some lenders refused to work with other lenders who may want to consolidate their loans. These lenders were known as the "dirty thirty".

5. default or delinquency status?

6. ever consolidated before? (If unsure—do you know if you are at a fixed or variable rate?)  (If unsure -- Have you ever completed a federal loan application where you listed your outstanding federal education loans?) (If unsure -- Do you recall receiving a notice last summer stating your rates were changing?)

Dirty Thirty Education Lenders

The Dirty Thirty were a group of FFEL lenders who did not cooperate with other lenders who wanted to consolidate the loans held by them. They are supposed to, but the reality was they didn't. The Dirty Thirty were willing to play nice with the Federal Government and would allow the Education Department's DIRECT program to consolidate their loans, just not other lenders. If their lender was Dirty Thirty, we had to pass on it. The prospects would have to give their current holder the opportunity  to fund the consolidation loan.  If that lender was unhelpful, their only option was to consolidate through the Direct Loan program through the Department of Education.

FAFSA Loan Consolidation (continued)

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