KASFAA Oz-Sociated Press, Summer 2003
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Loan Consolidation Inquiries

Submitted by
Michael Henderson
Texas Guaranteed

Loan consolidation is a popular topic. With interest rates falling again, you may find more and more borrowers contacting your office seeking assistance or additional information on consolidation options. As the summer progresses and preparations continue for the increasing fall traffic, financial aid professionals may need every resource at their disposal to most effectively respond to these requests.

To assist you with borrowers' inquiries about loan consolidation, TG has created a convenient clearinghouse for available resources. Consolidation Station (www.tgslc.org/borrowers/consol.cfm) is a free resource that can address your consolidation information needs. Use the valuable information presented for training your staff, for offering to borrowers who are seeking answers to their questions, or for ready-reference resources when questions arise.

AN OVERVIEW OF THE FEDERAL CONSOLIDATION LOAN PROGRAM

Available at www.tgslc.org/borrowers/consol_overview.cfm

This overview is an excellent primer offering basic information every borrower should know about loan consolidation. Divided into brief sections on "Types of loans that may be consolidated," "Interest rate considerations," "Selecting a lender or servicer," and "Extending your repayment terms," this resource can assist borrowers who are just beginning to explore their options.

SIX THINGS YOU NEED TO KNOW ABOUT TAKING OUT A FEDERAL CONSOLIDATION LOAN

Available at www.tgslc.org/borrowers/consol_six.cfm

Some of your inquiries may be from borrowers who want to "cut to the chase" and are seeking a quick summary of the benefits and drawbacks of consolidating their federal student loans. "Six things you need to know" delivers a useful list of major considerations that borrowers should evaluate before consolidating. Although every borrower should be cautioned that this list is not comprehensive (there are many exceptional circumstances that vary from one situation to the next), you may find this to be a useful tool to outline major considerations when evaluating consolidation options.

FREQUENTLY ASKED QUESTIONS ABOUT LOAN CONSOLIDATION

Available at www.tgslc.org/borrowers/consol_faq.cfm

Covering such topics as timing issues, deferment issues, lender issues, underlying loan issues, repayment issues, and spousal consolidation, this series of thorough responses can help borrowers better understand various facets of loan consolidation. A product of one of TG's recent Telephone Conference Series, this resource can also be included in your training materials to prepare counselors on the topic.

LOWER PAYMENTS, LARGER PAYOUT-IS IT WORTH IT?

Available at www.tgslc.org/borrowers/consol_repay_chart.cfm

Some borrowers start exploring consolidation because they are attracted to the idea of a lower monthly payment. For these borrowers, the challenge becomes demonstrating to them how extended payment periods increase the amount of interest that is paid throughout the life of the loan. "Lower payments, larger payout" offers three concrete examples of the long-term financial impact that should be expected in these situations. By using this tool that demonstrates the impact of interest, borrowers are more likely to make sound decisions about repaying their student loans.

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