Many students will be receiving information from many different lenders regarding consolidation this year. In order to help with the confusion this may cause, here are some guidelines about consolidation. There are two things to remember; one is not to panic about consolidation, and do not give in to a lender pressuring you into consolidation. The other thing to remember is always check with your current lender about consolidation before any other lender. If you do not know who your lender is, contact American Student Assistance (ASA) at 800-999-9080, x5010.

It could be in your best interest to consolidate this year, because the interest rates are going up next year. Also, this will be the last year you will be able to consolidate your loans while you are in school. Just remember: If you choose this option, you will lose your grace period and go directly into repayment once you graduate or leave school. American Student Assistance will also be able to answer general consolidation questions.

Consolidation:

• Federal loans can be consolidated together but not with alternative loans.
• It may be unwise to consolidate Perkins Loans (see section below).
• Reasons to consolidate:
  • Lock in an interest rate, which can rise each July
  • Combine loans into one lender
  • Extend repayment period from 10 years to 20-30
• Most companies are fairly reputable, e.g., Collegiate Funding Service, ACS.
• "One lender rule": you must consolidate with the lender that holds your Federal Direct Loans. If you have more than one lender, you may choose a consolidation company.
• When to consolidate:
  • Before this July 1st, to lock in your rate
  • Company may not give you a grace period.
  • Some companies will allow you to apply before July 1, but you will have to pay after the grace period (Federal Direct Loans have 6-month grace periods).
• Never consolidate with a spouse.
• Do not let a lender pressure you into consolidating. Make sure you check out your options and make the right decision for you.

Perkins Loans:

• 5% fixed interest rate
• Can be canceled over a 5-year period if you are working full time and if:
  • You work with children/adolescents aged 3-21 who are low income and at high risk of abuse and neglect, and it is not in a hospital or school setting.
  • You are a licensed clinician providing counseling or mental health treatment.
• BC owns this loan and needs to be furnished with an official job description in order to determine whether or not your job meets cancellation criteria.
• Has a 9-month grace period and is paid back over 10 years.
• Do not consolidate if you might meet cancellation criteria sometime within the repayment period.
• Do not consolidate if your interest rate will be higher than 5%.

Alternative Loans:

• The loans are not government regulated. They have higher interest rates, which are generally variable.
• Some companies may allow you to consolidate several alternative loans within their company in order to lock in a rate. Check your company. Be careful with these loans, because you will lose any benefits that were offered with the original loan.
• Because these loans are variable and have higher interest rates, try paying a bit extra each month (even $20) to pay off some of the principal.
• If you come into money, pay these loans off first.

Undergraduate loans:

• Federal Direct Loans can be consolidated with graduate school loans. Contact the Department of Education to find out how much and where your loans are. Visit NSLDS.Ed.gov for more information. Use your FAFSA PIN to logon.
• Undergraduate Perkins loans can also be canceled according to the same procedure, but each school makes an independent decision on whether you qualify.
• If you went directly to graduate school after undergraduate, you still have a 9-month grace period on your undergraduate Perkins loans and 6-month grace period on your undergraduate Federal Direct Loans.
• Don't forget that if you went into repayment on your undergraduate loans before starting graduate school, these loan will go immediately into repayment when you finish graduate school.

All students who have Federal loans (Perkins/Federal Direct) must attend a BC exit interview before graduation. During this meeting, you will receive information regarding your amount owed, how to access information, prospective payments, and consolidation. Exit interviews are scheduled for the month of April. Visit bc.edu/StudentLoan for more information.