Explain the Process of Refinancing Federal Student Loans
‘Refinancing’ your student loans is done using the Federal Consolidation Loan Program. The Dept. of Education licenses various lenders to participate in the program. The process is pretty simple and straightforward. You have two options either apply online or call a lender directly. Either way they’ll collect:
- Name, Address, Phone, Social Security Number
- List of loans you would like to consolidate (they will walk you through your loan file for you to let you know what is available)
- Two References
Once that’s complete the lender will let you know what your payment options are and you can either sign electronically or through the regular mail. All in all it should take no more than 10-15 minutes.
If you are trying to consolidate PLUS loans that were used for your education, if you did not sign for the loans (a parent or cosigner) the Dept. of Education requires their signature for those loans. A lender will be able to walk you through how its done.
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I decided which lender I wanted to refinance with and then filled out an application online. I had to give them references – these were not co-signers, they just want to make sure that they will be able to find you, my employment information, and the lenders and principle amount for each loan. There was a list on the website of what to have available before starting the process, but there was also a option to save my work and come back to it later if I found that I was missing a piece of information. It was really easy.
I combined Stafford loans, both subsidized and unsubsidized, and Perkins loans. I think that you can combine them as long as they are all student loans. The company contacted the lenders and got the exact payoffs on my loans, originated my loan, and paid off my initial loans. They then sent me the paperwork telling me how much my payments would be (they gave me an estimate when I filled out the application) and when payments were due. I also got paperwork from my lenders telling me that my obligations to them were paid in full. I doubt that paper applications are much more complicated than that.
My payments would have totalled about $400 per month and instead are about $280. There is no penalty for repaying early – an option that you want to make sure you have. The company that I went with (AES) can set up an automatic debit or take payments via their website as well as taking checks. Good luck!
I did my application on line to combine all my loans. It was relatively simple and painless. It’s still a pain though to send in that check every month!!
It shouldn’t be too hard. Just verify with the lender they will be able to do this for you. I did my consolidation with Sallie Mae…took 2 weeks and was a piece of cake.