ASLS (American Student Loans Services) FAQ
Student Loan Consolidation FAQ
Consolidation Interest Rate FAQ
Consolidation Payment FAQ
Student Loan Consolidation FAQ and Answers
Why should I consolidate my student loans?
Federal Student Loan Consolidation provides many benefits, even if you’re currently making your monthly payments without any difficulty.
- With Federal Student Loan Consolidation you will have only one monthly bill for your Federal Student Loans.
- The interest rate on a Federal Student Loan Consolidation is fixed for the life of the loan. Both Federal Stafford Subsidized and Unsubsidized Loans may carry variable interest rates that adjust annually.
- Consolidation is a good way to free up money to put towards higher interest bearing debt such as credit cards or car loans.
- Federal Student Loan Consolidation will help with your credit scores and debt-to-income ratio (DTI), both are key factors if you’re looking to purchase or refinance a home.
What are the benefits of Federal consolidation loans?
- It can reduce your monthly payment up to 50% or more, freeing up cash for higher interest bearing debt.
- Consolidation will lock in your interest rates for the life of the loan to help protect you from future rate increases.
- One convenient monthly payment for all your Federal Student Loans.
- Student Loan Consolidation will help improve your credit score and debt-to-income ratio (DTI).
- There are no fees or credit checks involved – this is a free Federal program.
- Pay off your loan as early as you want since there are no pre-payment penalties.
- Deferment and forbearance options are available to help you in times of financial stress as you will not be required to make payments during those periods.
- You may take advantage of automatic monthly payment options, which can further simplify your payment.
Federal Student Loan Consolidation allows borrowers (both parents and/or students) to lock in today’s low Federal interest rates and to combine several federal student loans payments into one simple monthly payment. With consolidation repayment can be spread over a longer time period, so your monthly payment amount will likely be lower.
What types of student loans may be consolidated?
- FFELP Stafford Loans - both Subsidized and Unsubsidized
- Direct Loans Stafford Loans - both Subsidized and Unsubsidized
- Federal Perkins Loans
- FFELP Parent PLUS Loans
- Direct Loans Parent PLUS Loans
- FFELP Consolidation Loans
- Direct Loans Consolidation Loans
- Federal HPSL Student Loans
- Federal Nursing School Loans and more...
Can I consolidate my student loans with credit cards, car loans, etc.?
You cannot combine non-federal loans of any kind with federal student loans through the Federal Consolidation Program. Why? Because they are different types of loans. Federal student loans are backed by the US Government; if a student doesn't pay their loans, the government pays the lender, and then obtains payment from the student. Private loans, such as credit cards, car loans, mortgages, etc. are backed by an individual’s creditworthiness and collateral. However, whenever you consolidate Federal student loans it will improve your credit ranking, and furthermore you may be able to qualify for better interest rates on your private loans when you refinance them.
Who is eligible for student loan consolidation?
You must have at least $25,000 in outstanding federal student loans. Call one of our highly educated Student Loan Advisors toll-free at (800) 575-1099 and we can confirm your eligibility. Most Federal student loan borrowers can be eligible, for example::
- You do not need to be employed to consolidate your loans.
- You do not need to have any form of collateral or a cosigner of any kind.
What can I do if I'm not eligible for Federal consolidation?
- Consider ASLS Private Student Loan Consolidation. (coming soon)
- Consider refinancing a home or investment property to pay down the loan. If you've previously consolidated at high interest rates.
- Consider a personal line of credit from your bank or credit union. (if your interest rate is higher on your consolidation that what your bank or credit union is offering you)
How do I apply for Federal student loan consolidation?
ASLS makes it easy. We have 2 easy and convenient ways to apply.
- Apply Online using our simple consolidation form!
- Talk to one of our highly educated Student Loan Advisors, call toll-free (800) 575-1099.
How long does an average consolidation take?
Our consolidation process normally takes 30 - 60 days. Most of this processing time involves collecting the Loan Verification Certificate(s) (LVC). An LVC is the title of the loan. Some lenders take longer than others to return the LVC.
Are there any fees involved with Federal consolidation?
No, there are absolutely no fees to consolidate federal student loans. Since it is a free Federal program, no lender is allowed to assess any fees to a Federal Student Loan Consolidation.
Are any credit check required to consolidate?
There are no credit checks for the Federal Student Loan Consolidation program because the loans are guaranteed by the US Government. However, if you consolidate it will actually improve your credit rating.
Can I consolidate my student loans with my parents Federal PLUS loans?
All Federal student loans that are under the same borrower’s Social Security Number (SSN) can be consolidated into one loan. Unfortunately Parent PLUS loans are not under the same SSN that the Federal Stafford Loans for the student, thus students cannot add the Parent PLUS loans together with their Federal Stafford Loans, or vice-versa.
Can I consolidate with my spouse?
As of July 1st, 2006 Federal Spousal Student Loan Consolidation are no longer permitted under the Federal Family Education Loan Program (FFELP).
Consolidation Interest Rate FAQ and Answers
How is the interest rate determined?
The interest rate is determined by taking a weighted average of the interest rates on all loans being consolidated and rounding up to the nearest 1/8 of 1%. The cap on a Federal consolidation loan is 8.25%.
Is the interest I pay tax deductible?
Most people can deduct the interest that is paid on Federal Student Consolidation Loans. Please consult your tax advisor for more information.
What are the current Federal interest rates?
The rate will be a fixed rate equal to a weighted average of the interest rates on your existing student loans, and are then rounded up to the nearest one-eighth of one percent. Currently, rates are set to the following starting points:
Use our Loan Calculator to help you figure out your new rate and monthly payment.
When do student loan rates change?
Federal Stafford and Parent PLUS Loan interest rates changed annually on July 1st of every year. HEAL Loans change every quarter (3 months). Interest rates on both Federal Stafford and Parent PLUS Loans are set by the 91 Treasury bill (t-bill). As of July 1st, 2006 Federal Stafford and Parent (PLUS) Loans disbursed after July 1st, 2006 are at fixed interest rate.
How do I know what my payment will be?
Try our easy to use consolidation loan calculator to get an idea of your monthly payments.
How is the consolidation loan repaid?
Your first payment is due no more than 60 days from the date the Consolidation loan is disbursed. You have different repayment schedules to choose from and they include:
- Standard payments (fixed monthly payments over a fixed time)
- Graduated payments (payments which gradually increase over the years)
- Income-Sensitive payments (variable payment amounts based upon annual income) you will need to apply for this after the consolidation has gone through, due to the paperwork needed to determine your monthly payment.
- Extended payments (more than $30,000 over a 25 year period or more than $60,000 over a 30 year period).
Are there any prepayment penalties?
No, there are absolutely no early repayment penalties for a Federal Student Loan Consolidation.
Do I continue making loan payments while my consolidation application is in process?
Yes! You will need to continue making payments to your current lenders until you are notified that your loans have been paid off through the consolidation process. Since consolidation can take anywhere from 30 - 60 days to process, it’s important that you don't fall behind on payments. Once your consolidation is complete, you will receive a new disclosure and repayment schedule, with your new monthly payment and due date.
Can I use deferment or forbearance?
Yes! One of the greatest benefits of federal student loan consolidation is that you retain all your federal borrowing privileges, such as:
- Deferment of your consolidation payments when you return to school or you are having economic hardships.
- Forbearance of your consolidation for up to 36 months.
- Forgiveness of your entire loan if you pass away.
How do you use your deferments? Once you consolidate, you will receive you new disclosure and repayment schedule. At that time, you can request a deferment or forbearance form. Note: Try to use deferment first, because while in deferment the US Government will pay all your accruing interest on the subsidized portions of your Federal Stafford Loans.
Won’t my total cost increase if I extend my repayment term?
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. The interest rate benefits will help you shorten the life of the loan, as will any prepayments towards the principal of the loan.
