Refinancing Student Loans

7 Little-Known Facts about Refinancing Student Loans

7 Little-Known Facts about Refinancing Student Loans

Refinancing student loans is so simple that many people tend to overlook some of the key factors that can make a major impact on the overall cost. Ensuring that you're utilizing every money-saving opportunity when it comes to your student loans can amount to huge savings over the course of the 10-20 years you spend repaying your loan. You might be surprised at how many ways there are to easily save money when you refinance student loans.

Your interest rate will be .60% less if you refinance student loans during the grace period

The single most important way to reduce the total amount you repay is to refinance student loans during the post-graduation grace period. Following graduation, every student has the right to a 6 month grace period before they must begin repaying their loans.

During this grace period, the rates to refinance student loans are a full .60% lower than they are once the loan enters into repayment status. When you refinance student loans during the grace period, you will lock in these lower rates for the entire repayment period.

Lender incentives can save big bucks when it's time to refinance student loans

Not all companies that refinance student loans are created equally, and where they differ the most is in the interest rate reduction incentives offered. Aside from choosing to refinance student loans during the grace period, lender incentives can be the most effective way to shave a big chunk of money off of your monthly payment.

Look for those that offer interest rate reductions versus dollar amount reductions then compare the percentage of the reduction. Reductions for on-time payments and auto-debit are the most common types of incentives. While many companies offer a .25% rate reduction for payments made by auto-debit, ScholarPoint gives .5%. Many lenders also offer a 1% interest rate for making 36 months of consecutive on-time payments. ScholarPoint offers this 1% rate reduction a full year earlier.

Deferment and Forbearance starts over

Student loans allow a post-grad to put loans on hold for a specific amount of time over the course the loan repayment period. During this hold, called a deferment or forbearance, the borrower does not need to make payments on the loan although interest does accrue and is added to the balance of the loan.

The deferment and forbearance benefits aren’t lost when you refinance student loans – in fact, the “clock” starts over again so that these hold periods are refreshed and can be used again in full.

You could pay more by incorporating fixed-rate loans into your consolidation

The reason it’s smart to refinance student loans is that most student loans are written with a variable interest rate. This means that every year when the federal government decides on a new interest rate, the payment on your old student loan will change if you haven’t refinanced.

However, not all student loans are written with variable interest rates. Some types of loans like the Federal Perkins Loan and the HPSL loan are fixed interest rates, meaning that the rates always remain the same. If the interest rate offered when you refinance student loans is higher than that of your fixed-rate loans, then you could actually pay more by adding your fixed-rate loans to the mix when you refinance student loans. ScholarPoint lending specialists can help you find the most cost-effective solution in terms of which loans to incorporate.

No reconsolidation after July 1st

For years, borrowers have enjoyed the flexibility of refinancing student loans multiple times in order to take advantage of better interest rates or to extend their repayment period. Beginning July 1st 2006, student loan borrowers will no longer have this option except for in a few select circumstances. These new limitations are part of the “Deficit Reduction Act,” a set of changes in place to begin repair of the nation’s rising deficit.

After July 1st, borrowers will have the option to refinance student loans only in cases where some of the loans were left out of the original consolidation or the borrower has new loans to add in or if the current lender does not offer an income-sensitive repayment plan. Because borrowers are more or less locked in with the first lender they choose, it’s critical to find a lender with a solid reputation and high incentive savings options.

In order to refinance, loans cannot be in default

In order to refinance student loans, the payments must first be current and not in default. Loans that are current include those that are in their grace period, deferment, or in forbearance – as long as there are no payments due.

If you are a month or so behind on your student loans because of extenuating financial strain, try contacting your current lender about securing a hardship deferment before refinancing student loans. Oftentimes, if the payment is just a little overdue and your financial situation qualifies, the lender will backdate the forbearance thus bringing your loan current so that you can move forward in your effort to refinance student loans.

A consolidated loan cannot combine private and federal loans

If you’ve got loans from a private lender as well as loans that were granted through a government student loan program, you’ll need to secure two different loan consolidations.

Most lenders recommend consolidating federal student loans first and then working on private loan consolidation afterward. Separate consolidations are only necessary for private and federal loans. Any type of federal loan can be combined such as subsidized and unsubsidized Stafford loans.

Refinancing student loans is a wonderful way to lower monthly payments and lock in low fixed rates. These 7 key factors can help you to save even more by taking advantage of every benefit that student loans have to offer. If you’d like to discuss these points further or start the consolidation process now, contact us by phone at 877-561-8042 or click here to chat with a live representative online.

Consolidate your Federal Student Loans, Start your Application Today!

 

Graduates and Professionals

Graduates and Professionals

Organizing Your Student Loan Debt

Federal Consolidation Loan - If you are graduating or have recently graduated with student loans to repay – now is the time to consolidate your debt. You can eliminate multiple bills, get the lowest possible payment while you are starting your career, and lock in a low fixed interest rate for the life of the loan.

When researching student loan consolidation opportunities, we recommend considering interest rate discounts or borrower benefits as well as convenience and service. ScholarPoint is the ideal online student loan provider. For your federally guaranteed student loans, we offer industry-leading interest rate discounts and complete online convenience – apply for your Consolidation Loan today. There is no cost to you to apply or fund a consolidation loan and there is no pre-payment fee.

  • Organize your loans into one easy billing location
  • Lock-in today’s low rate
  • Take advantage of ScholarPoint’s industry-leading interest rate discounts

Learn More about Federal Consolidation Loans and to Apply Today >

Private Consolidation Loan - If you financed your education with private, non-federally guaranteed loans, we can help you consolidate those loans into one easy payment and possibly lower your rate and make payment and management of these loans a lot easier. ScholarPoint has partnered with The Education Loan Marketplace to bring you a private consolidation loan solution. The Education Loan Marketplace™ is a tool that will help solve the puzzle of paying for and managing the cost of education. You can obtain information and apply online for the Private Consolidation Loan. You can learn about this loan product and access services such as the Ed-Loans wizard, which provides you with the necessary information you need to make informed decisions about education financing.

Learn More about Private Consolidation Loans and to Apply Today

New Loans for Continued Study

If you plan to continue your education, you can finance your graduate studies through ScholarPoint’s partner, The Education Loan Marketplace.

Learn about the Student Loans Available for Graduate Students and Apply Today >

Which Student Loans Should Be Consolidated?

In most cases, consolidating student loans is an ideal option for lowering monthly payments and consistent, predictable monthly payments. The biggest attraction of consolidating student loans is locking in a fixed interest rate and gaining freedom from the government’s fluctuating variable interest rates. However, not every student loan is perfectly suited for consolidation. Each different type of student loan has different qualities that should be weighed when consideration whether to include them when consolidating student loans.

  • The Stafford Loan – Ideal for consolidation

    Stafford loans are the most popular type of loan and ideal for student loan consolidation. The Stafford Loan is a variable interest rate loan, meaning that every July 1st when the government implements the new rate changes, the amount of your Stafford loan payment will change. No matter how long ago the loan was written, the payments continue to fluctuate for as long as payments are due.

    Consolidating student loans with variable interest rates can reduce payments up to 63% through a combination of low fixed interest and an extended repayment period. Stafford loans offer forgiveness programs for those in certain professions, particularly teachers. If you’re considering consolidating student loans, you’ll want to verify that you won’t lose this benefit if you’re eligible. Before consolidating student loans, check to see if your profession or volunteer group makes you eligible for student loan forgiveness.

  • The Perkins Loan – Consider the current interest rate before consolidating

    Unlike the Stafford Loan, the Perkins Loan is a fixed-rate loan and not subject to rate fluctuations. The interest rate on your Perkins loan will have been determined by the interest rates at the time the loan was issued. If today’s interest rates are lower than the interest rate of the loan, then consolidating student loans with the Perkins loan included is a good option.

    However, if the interest rate today is higher than it was at the time your loan was issued, you will pay more over the course of the repayment period to include the Perkins when consolidating student loans. For some borrowers, the benefit of one low monthly payment is more important than saving a few dollars over the course of 10 years. ScholarPoint loan specialists can help you compare the cost with or without the Perkins Loan included so that you can make the choice that is best for you when consolidating student loans.

  • The PLUS Loan – Ideal for Consolidation

    The PLUS loan is another variable interest rate loan that fluctuates with the current government interest rates. PLUS loans generally have a higher interest rate than Stafford Loans so when rates increase the interest payments are even more significant.

    Until July 1st, 2006, PLUS loans were only for parents. Because the loan is written in the parent’s name, it cannot be consolidated with the student’s loan. However, multiple PLUS loans can be combined when consolidating student loans. Changes in 2006 will allow graduate students to take out PLUS loans in their own names.

  • HPSL Loan – Ask questions about deferment before consolidating

    Like the Perkins Loan, the HPSL (Health Professions Student Loan) has a fixed rate of interest. The HPSL loan also has some deferment options that consolidating student loans could eliminate.

    The HPSL loan is specifically designed to meet the needs of those in the health care industry. The loan allows the borrower to defer payments for the first 3 years after graduation while in residency. If you have an HPSL loan, contact the lender you are considering to find out if your deferment options will carry on after consolidating student loans.

  • Direct Loans – Ideal for consolidation

    If you received the balance of your student loan check directly from your school’s financial aid office, then your school most likely participates in the Direct Loan program. If this is the case, consolidating student loans must first be done through the Direct Loan program before shopping around for your choice of student loan refinancing lender.

    Before July 1st, 2006, borrowers had the option to shop around for a lender when comparing options for consolidating student loans. After July 1st, Direct Loan borrowers will face more restrictions when it comes to choosing a lender. Borrowers will now only have the freedom to switch lenders in cases where the Direct Loans refinance lender does not offer an income-sensitive repayment option.

    Most student loans are Stafford loans and are ideal for consolidating. Student loans all have their own unique qualities and benefits. At ScholarPoint, we’ll let you know about the pros and cons of consolidating student loans of various types. Contact one of our loan counselors today by phone at 877-561-8042 or by live chat to find out how much money you can save by consolidating student loans.

Consolidate your Federal Student Loans, Start your Application Today

Using Lender Incentive Programs to Save Thousands on Student Loan Refinancing

Using Lender Incentive Programs to Save Thousands on Student Loan Refinancing

One of the simplest ways to cut thousands of dollars off of your student loan repayment is to shop around for, then take advantage of incentive programs offered by student loan refinancing companies. Lenders generally offer very similar base interest rates for their loans – the difference is in the types of incentives each offer.

ScholarPoint has shopped the student loan refinancing market and made a conscious choice to offer higher dollar saving incentives than our competition – but we encourage you to shop around to and learn about various discounts on your own without taking our word for it. Be cautious with your comparisons. Oftentimes the student loan refinancing discounts that appear to be less significant like interest rate reductions pack a much heavier punch than fixed dollar amount reductions.

The impact on interest rates in terms of student loan refinancing

The power of an interest rate with student loan refinancing can be astounding. Einstein even developed his “rule of 72” theory based on his fascination with how quickly interest rates could work to accrue money. Most people understand how a seemingly insignificant percentage rate can add when they look at their credit card statements.

With student loan refinancing lender incentive programs, you can shave percentage points off of your loan that will impact the entire 10-20 year repayment term. Even the smallest interest rate decrease can make a major impact on the total amount of money you’ll repay over the course of the loan. ScholarPoint offers student loan refinancing incentives that amount to a full 1.5% interest rate reduction.

Types of interest rate reductions

Not every lender offers student loan refinancing incentives in terms of interest rate reductions. Of those that do, the amount of interest deducted varies greatly. There are two main reasons why interest rate reductions are generally offered by a student loan refinancing lender:

Automatic Payments:

Making automatic payments simply mean setting the preferences on your accounts so that payments come out automatically. Most people are already using this method to pay at least some of their bills. Student loan refinancing lenders that offer this option usually give a .25% discount for making auto payments. ScholarPoint offers double the discount, a .50% interest rate reduction.

On-Time Payments

Why not be rewarded for paying your bills on time?  Some student loan refinancing lenders offer a full percentage point discount after making a certain amount of timely payments. The standard for the on-time payments discount is 1% after 36 months. ScholarPoint offers this 1% discount after only 24 months, a full year earlier.

Reduction in Principal

With a principal reduction, a percentage of the remaining balance is deducted free and clear. The most common type of principal reduction is usually offered by student loan refinancing lenders after making a specific number of on-time payments. Normally, student loan refinancing lenders will either offer an interest rate reduction or a principal reduction for on-time payments.

At a glance, the principal reduction can seem like big savings, but be sure to do the math. If the interest rate on the remaining payments stays the same, you’ll probably pay more than if you were to choose a student loan refinancing lender with an interest rate reduction incentive.

Cash Back Incentives

With a cash-back program, the student loan refinancing lender gives you “cash” back to apply to your remaining balance. The concept is similar to principal reduction. Most often, a 1% cash-back incentive is offered after making 36 consecutive on-time payments.

The terminology seems to represent big savings, but be sure to calculate the savings. If you were to receive a cash-back incentive on a remaining $30,000 loan, you would receive a $300 deduction. On the other hand, had you chosen a student loan refinancing lender with a 1% interest rate reduction on the remaining payments, the savings would have amounted to around $1000.

Do the research and choose wisely

Use a student loan refinancing calculator to help you understand how the incentive programs offered by various lenders can reduce the total amount you’ll pay on your student loans. If you’ve got questions about interest rates, incentive programs, or the general process of student loan refinancing, contact ScholarPoint by phone at 877-561-8042 or click here to chat with us online.

 

Graduates and Professionals

Graduates and Professionals

Organizing Your Student Loan Debt

Federal Consolidation Loan - If you are graduating or have recently graduated with student loans to repay – now is the time to consolidate your debt. You can eliminate multiple bills, get the lowest possible payment while you are starting your career, and lock in a low fixed interest rate for the life of the loan.

When researching student loan consolidation opportunities, we recommend considering interest rate discounts or borrower benefits as well as convenience and service. ScholarPoint is the ideal online student loan provider. For your federally guaranteed student loans, we offer industry-leading interest rate discounts and complete online convenience – apply for your Consolidation Loan today. There is no cost to you to apply or fund a consolidation loan and there is no pre-payment fee.

  • Organize your loans into one easy billing location
  • Lock-in today’s low rate
  • Take advantage of ScholarPoint’s industry-leading interest rate discounts

Learn More about Federal Consolidation Loans and to Apply Today >

Private Consolidation Loan - If you financed your education with private, non-federally guaranteed loans, we can help you consolidate those loans into one easy payment and possibly lower your rate and make payment and management of these loans a lot easier. ScholarPoint has partnered with The Education Loan Marketplace to bring you a private consolidation loan solution. The Education Loan Marketplace™ is a tool that will help solve the puzzle of paying for and managing the cost of education. You can obtain information and apply online for the Private Consolidation Loan. You can learn about this loan product and access services such as the Ed-Loans wizard, which provides you with the necessary information you need to make informed decisions about education financing.

Learn More about Private Consolidation Loans and to Apply Today

New Loans for Continued Study

If you plan to continue your education, you can finance your graduate studies through ScholarPoint’s partner, The Education Loan Marketplace.

Learn about the Student Loans Available for Graduate Students and Apply Today >

The Right Time to Consolidate Student Loans

The Right Time to Consolidate Student Loans

Anytime is great to consolidate student loans if your goal is to reduce monthly payments, increase cash flow, and lock in a fixed interest rate. However, there are a few windows of opportunity that can increase cost savings even more:

Consolidate student loans during the grace period

When you consolidate student loans during the 6-month post-graduation grace period, you’ll take advantage of one of the biggest money-saving opportunities available. During this grace period, the interest rates are approximately .60% lower than when the loan moves into repayment status. The interest rate you receive when you consolidate student loans is dependant on the current government rate on the loan. When you consolidate student loans during this short window of time you lock in an incredibly low rate for the next 10-30 years of repayment.

When to apply to consolidate student loans

It can take several months to process an application to consolidate student loans. It’s important to apply as early as possible to ensure that the process is complete by the time your grace period ends. Applying to consolidate student loans online can greatly reduce the amount of time to process the loan. Most borrowers who apply online with ScholarPoint have their loans processed within a week as opposed to several months. You won’t lose the benefit of the grace period if you apply to consolidate student loans early. On the application, you’ll be able to designate when you’d like the loan repayment to begin.

Consolidate Student Loans by June 30th, 2006 to lock in today’s lower rates

Every July 1st, the government resets the student loan interest rates. As in any market, sometimes interest rates are more favorable than during other times. In 2006, rates will be significantly higher than in 2005. The increase is part of a plan to reduce the rising national deficit by increasing the amount of interest paid back on student loans. If you don’t get to consolidate student loans by June 30th, 2006, it’s still important to consolidate early. Rates in coming years are expected to remain higher than they have been in the recent past.

July 1st changes will cut several consolidation benefits

If you are still in school, or are married and want to consolidate student loans with your spouse, or want to refinance a previously consolidated student loan, the time to consolidate is by June 30th, 2006. Part of the new federal laws will either eliminate or reduce benefits in all of these situations. The opportunity to consolidate student loans for those in school or who are married will no longer be an option as of July 1st. Those who wish to consolidate student loans a second time will be limited in their options.

If you’ve missed either of these windows, you’ll still save money on your monthly payments

The benefit when you consolidate student loans is that you can leverage time and a fixed interest rate to enjoy a much lower monthly payment. When you consolidate student loans, all of the outstanding loans are paid off and replaced with one fixed-rate loan and a repayment period as long as 30 years. This combination of factors can reduce monthly student loan payments by more than 60%.

Increase monthly cash flow when you need it most

Most people directly out of school and just starting careers need the benefit of the low monthly payments. When you consolidate student loans, you can easily improve your monthly cash flow by lowering your student loan payment. As your level of income grows, you can choose to make larger payments to cut down on the years of repayment without any additional penalties.

Reduce open loans before applying for major credit purchases

Another great time to consolidate student loans is before applying for credit on major purchases like a home or car. A student who takes out just one subsidized and one unsubsidized student loan every semester will end college with 16 open loans on their credit report. All of these open loans can negatively impact your credit rating, causing you to pay higher interest on new lines of credit. By consolidating student loans, you will close all of these open loans and replace them with a single, fixed interest rate loan.

Anytime is a good time to consolidate student loans. The process is simple, easy, and getting a quote to find out how much you can save is completely free. Fill out the online application form to consolidate student loans today or chat with one of our loan specialists online now to find out how much you can save.

Consolidate your Federal Student Loans, Start your Application Today,

 

5 Ways to Save Money by Consolidating Student Loans

5 Ways to Save Money by Consolidating Student Loans

Student loans are some of the most flexible and consumer-friendly loans available. Understanding how to use the process of consolidating student loans to your benefit can help you to save a great deal of money. Most people realize that consolidating student loans can help them to lower their monthly payments, but there are also plenty of added benefits such as improving credit rating and lowering debt to income ratio. Here we’ll take a detailed look at 5 ways you can save money by consolidating student loans:

  1. Your rates are locked in at today’s low rates after consolidating student loans

    Because the majority of student loans are variable rate loans, they are subject to constant fluctuation depending on the current interest rates set by the government. By consolidating student loans, you can lock in a low fixed interest rate. Because the rate is fixed after consolidating student loans, there are never any surprises when the first bill arrives after the yearly rate adjustment.

    For many years, student loan rates remained at record lows. On July 1st, 2006, rates will increase significantly as a result of a government plan to reduce the federal deficit. Those who don’t refinance by July 1st will still save money each month by consolidating student loans. After consolidating student loans, the balance can be repaid over a longer period of time, reducing monthly payments by as much as 60%.

  2. You can receive additional interest rate reductions by consolidating student loans

    When consolidating student loans, you not only enjoy a fixed interest rate but you can also earn additional interest rate reductions offered by the lender consolidating your student loans. Different lenders offer different types and amounts of incentive plans, and by knowing what to look for, you can save yourself a great deal of money above and beyond the already low consolidation rate.

    ScholarPoint offers its customers a full 1.5% interest rate reduction, one of the most competitive savings incentives offers in the industry. The majority of incentives are offered to customers for making on-time payments and for having payments directly debited from their account – something most people do anyway!

  3. Improve your credit score by consolidating student loans

    Many students take out numerous loans throughout their college years. A student that takes out just one subsidized and one unsubsidized student loan every semester will accumulate 16 different loans on their credit report over the course of four years. While numerous loans are a benefit when it comes to paying for college, they can really drag down a credit score after college.

    When consolidating student loans, all of these open loans are closed and replaced with one simple loan for the entire balance. After consolidating student loans, you will also have a much lower monthly payment, thus reducing your debt to income ratio.

  4. Reduce debt to income ratio by consolidating student loans

    Consolidating student loans can shave as much as 63% off of your monthly payment by extending the repayment period. This can make a huge difference in your cash flow each month. When creditors consider whether or not to lend you money, they will consider your debt to income ratio, which is the amount of income coming in compared with the amount paid toward bills each month.

    A typical student with a $300 per month student loan payment can save as much as $200 per month by consolidating student loans. These savings can certainly make the difference between securing a loan for a car or other necessities. A favorable debt to income ratio can also help you to secure lower interest rates on new lines of credit which can literally save you thousands of dollars over a lifetime. 

  5. Reduce dependence on high-interest debts by consolidating student loans

    Many young professionals just out of college turn to high-interest credit cards to help them get through the period where expenses are high and their careers are just ramping up. The average college student carries 6 credit cards with a combined balance of around $2100. These high-interest credit card debts can really put a strain on your finances and limit your capacity for getting ‘good’ credit.

    By consolidating student loans, borrowers can free up several hundred dollars in disposable income and reduce dependence on high-interest credit cards. The savings can be used to pay off high-interest credit card debts accrued during college. Paying off just $200 per month above the minimum could more than pay off the average college student’s credit card balance in just one year.

    Consolidating student loans is simple and extremely fast now thanks to the internet. By consolidating student loans today, you could save yourself several hundred dollars by the time you make your next loan payment.

Consolidate your Federal Student Loans, Start your Application Today.

Which Student Loans Should Be Consolidated?

In most cases, consolidating student loans is an ideal option for lowering monthly payments and consistent, predictable monthly payments. The biggest attraction of consolidating student loans is locking in a fixed interest rate and gaining freedom from the government’s fluctuating variable interest rates. However, not every student loan is perfectly suited for consolidation. Each different type of student loan has different qualities that should be weighed when consideration whether to include them when consolidating student loans.

  • The Stafford Loan – Ideal for consolidation

    Stafford loans are the most popular type of loan and ideal for student loan consolidation. The Stafford Loan is a variable interest rate loan, meaning that every July 1st when the government implements the new rate changes, the amount of your Stafford loan payment will change. No matter how long ago the loan was written, the payments continue to fluctuate for as long as payments are due.

    Consolidating student loans with variable interest rates can reduce payments up to 63% through a combination of low fixed interest and an extended repayment period. Stafford loans offer forgiveness programs for those in certain professions, particularly teachers. If you’re considering consolidating student loans, you’ll want to verify that you won’t lose this benefit if you’re eligible. Before consolidating student loans, check to see if your profession or volunteer group makes you eligible for student loan forgiveness.

  • The Perkins Loan – Consider the current interest rate before consolidating

    Unlike the Stafford Loan, the Perkins Loan is a fixed-rate loan and not subject to rate fluctuations. The interest rate on your Perkins loan will have been determined by the interest rates at the time the loan was issued. If today’s interest rates are lower than the interest rate of the loan, then consolidating student loans with the Perkins loan included is a good option.

    However, if the interest rate today is higher than it was at the time your loan was issued, you will pay more over the course of the repayment period to include the Perkins when consolidating student loans. For some borrowers, the benefit of one low monthly payment is more important than saving a few dollars over the course of 10 years. ScholarPoint loan specialists can help you compare the cost with or without the Perkins Loan included so that you can make the choice that is best for you when consolidating student loans.

  • The PLUS Loan – Ideal for Consolidation

    The PLUS loan is another variable interest rate loan that fluctuates with the current government interest rates. PLUS loans generally have a higher interest rate than Stafford Loans so when rates increase the interest payments are even more significant.

    Until July 1st, 2006, PLUS loans were only for parents. Because the loan is written in the parent’s name, it cannot be consolidated with the student’s loan. However, multiple PLUS loans can be combined when consolidating student loans. Changes in 2006 will allow graduate students to take out PLUS loans in their own names.

  • HPSL Loan – Ask questions about deferment before consolidating

    Like the Perkins Loan, the HPSL (Health Professions Student Loan) has a fixed rate of interest. The HPSL loan also has some deferment options that consolidating student loans could eliminate.

    The HPSL loan is specifically designed to meet the needs of those in the health care industry. The loan allows the borrower to defer payments for the first 3 years after graduation while in residency. If you have an HPSL loan, contact the lender you are considering to find out if your deferment options will carry on after consolidating student loans.

  • Direct Loans – Ideal for consolidation

    If you received the balance of your student loan check directly from your school’s financial aid office, then your school most likely participates in the Direct Loan program. If this is the case, consolidating student loans must first be done through the Direct Loan program before shopping around for your choice of student loan refinancing lender.

    Before July 1st, 2006, borrowers had the option to shop around for a lender when comparing options for consolidating student loans. After July 1st, Direct Loan borrowers will face more restrictions when it comes to choosing a lender. Borrowers will now only have the freedom to switch lenders in cases where the Direct Loans refinance lender does not offer an income-sensitive repayment option.

    Most student loans are Stafford loans and are ideal for consolidating. Student loans all have their own unique qualities and benefits. At ScholarPoint, we’ll let you know about the pros and cons of consolidating student loans of various types. Contact one of our loan counselors today by phone at 877-561-8042 or by live chat to find out how much money you can save by consolidating student loans.

Consolidate your Federal Student Loans, Start your Application Today

Can consolidating my student loans help my credit score?

Yes, Consolidating Student Loans Can Improve Your FICO Score.

Most people are aware that consolidating student loans can greatly lower their monthly payments. However, many borrowers don’t realize how great of an impact consolidating student loans can have on their FICO score. Consolidating student loans is perhaps one of the most effective ways to quickly improve your FICO score, in turn saving a great deal of money on future big-ticket credit purchases like cars and homes.

The anatomy of a FICO score

A FICO score is derived from giving a numerical value to different elements of creditworthiness and running those numbers through a complex algorithm. The score considers your current and past financial situation in order to make a prediction about how likely you are to pay your bills on time in the future. Each credit-worthiness factor is weighted according to its importance:

35% - Payment history
30% - Amount of debt owed
10% - Length of credit history
10% - Types of current credit
15% - Miscellaneous

The direct impact of consolidating student loans on your credit

The first way that consolidating student loans positively impacts your FICO score is by closing all of the open student loans and replacing them with one, predictable, fixed interest loan. Because the amount of debt owed is such a highly ranked factor, reducing the amount owed can make a big impact on your overall score. Lenders most certainly consider the debt to income ratio when deciding if you can comfortably take on a new payment. Because consolidating student loans can reduce your monthly student payment by up to 60%, your debt to income ratio can be significantly lowered.

If a graduate with a $30,000 debt pays around $313 per month before refinancing. After consolidating student loans, the new loan payment is around $106, freeing up an additional $207 per month. When considering the purchase of a new vehicle with a $300 monthly payment, having an extra $200 a month in disposable income can be a deciding factor on whether or not you can secure the auto loan at a favorable interest rate.

The indirect impact of consolidating student loans on FICO score

The reason most young adults find themselves in credit trouble is that they often need to rely on high-interest credit cards to get through school and the years following graduation. People just out of college already have the chips stacked against them with a long future of student loan bills and plenty of things to purchase. Additionally, recent graduates are usually just starting their careers and earning only a fraction of their likely future salary which makes it more difficult to pay off old credit card debt and easy to take advantage of new offers.

Saving several hundred dollars a month by consolidating student loans can give graduates the additional income needed to pay down harmful high-interest credit card debts. If the student in the above example were to use the savings from consolidating student loans to pay down credit cards, this would add up to $2,400 per year and $12,000 over a span of 5 years. Being financially savvy is the art and practice of leveraging good debt to eliminate dangerous high-interest debt.

Student loan consolidation: how it works to lower your monthly payments

When consolidating student loans, your lender pays off all of your existing variable interest rate loans then writes a new, fixed interest rate loan which you are then responsible for. The borrower still retains all of the benefits enjoyed before consolidating student loans such as the ability to defer payments or apply for forbearance.

The main reason why payments can be so much lower after consolidating student loans is that the loan can be spaced out over a longer period of time, thus reducing the amount due monthly. Borrowers can pay off the loan early at any time without penalty should they choose. By consolidating student loans, graduates can leverage what they have a lot of – time, against something that is generally less readily available – money.

Building a strong financial base and maintaining a healthy FICO score is a critical factor in the type of home you can own, the type of car you can buy, and the quality of life you can enjoy. Consolidating student loans today means taking the first step in building a strong financial future.

Consolidate your Federal Student Loans, Start your Application Today

Consolidation Loans – General

Consolidation Loans – General

What is Consolidation?

A Federal Consolidation Loan is a repayment option for student loan borrowers. It is designed to make education loan repayment easier by combining existing eligible federal education loans into one new loan with a lower monthly payment. You can consolidate with ScholarPoint if you have Federal Direct Student Loans or eligible loans with multiple lenders.

 

Why should I consolidate my student loans with ScholarPoint?

ScholarPoint offers complete and instant online student loan experience. You simply enter your information into our easy-to-use online form, sign electronically for your promissory note and we immediately begin processing your loan.

In addition to our incredibly fast and simple process, we also offer some of the most competitive student loan interest rates and borrower benefits available. If you want to secure a low rate for the life of your student loan and reduce your monthly payments to the lowest possible payment then ScholarPoint is your only choice.

ScholarPoint communicates with its customers via email. You will receive ongoing email correspondence during your loan processing providing you with up-to-date status of your approval process and when you can expect your loan to be approved and funded. ScholarPoint customers also have a "My Account" page where you can log on anytime to check your student loan status and manage your loans.

 

What do I do if another lender contacts me during the process of consolidating with ScholarPoint?

The decision of which lender to work with is your choice. We want to earn your business. We are committed to offering the ideal online student loan application process.

Once you have started the process with ScholarPoint, our recommendation is that you tell any other lender that may call that you already have a lender and are in the process of consolidating.

Often these salespeople are persistent. We like to think that our online process is a way for you to avoid that high-pressure sales call. We have staff available to talk with you, but we wait for you to contact us and we provide you with email, chat, and phone as a means to communicate with us.

When can a borrower consolidate?

The decision of which lender to work with is your choice. We want to earn your business. We are committed to offering the ideal online student loan application process.

Once you have started the process with ScholarPoint, our recommendation is that you tell any other lender that may call that you already have a lender and are in the process of consolidating.

Often these salespeople are persistent. We like to think that our online process is a way for you to avoid that high-pressure sales call. We have staff available to talk with you, but we wait for you to contact us and we provide you with email, chat, and phone as a means to communicate with us.

When can a borrower consolidate?

To qualify for a Federal Family Education Loan Program (FFELP or FFEL) Consolidation loan, the borrower must meet the following eligibility criteria* at the time he/she applies for the Consolidation loan:

  • Be in the grace period or have entered repayment on each loan chosen for consolidation.
  • If any Title IV loans being considered for consolidation are in default, the borrower must either make satisfactory repayment arrangements with the holder of each defaulted loan or agree to repay the consolidating lender under an Income Sensitive repayment schedule.

There may be additional eligibility criteria. Call ScholarPoint Customer Support for details.

Also, see in-school consolidation options below.

What loans are eligible for a ScholarPoint Consolidation loan?

The following is a list of loans types that are eligible for inclusion in the Federal Consolidation Loan Program:

  • Subsidized Federal Stafford Loans
  • Unsubsidized Federal Stafford Loans
  • All Federal Direct Student Loans (Direct Loans)
  • Federal Parent Loans for Undergraduate Students (PLUS)
  • Federal Perkins Loans
  • Health Professions Student Loans (HPSL)
  • Nursing Student Loans
  • Federal Supplemental Loans for Students (SLS)
  • Auxiliary Loans to Assist Students (ALAS)
  • National Direct Student Loans (NDSL)
  • Federally Insured Student Loans (FISL)
  • Federal Consolidation Loans

What if I have a Perkins or Direct Loans as well as loans from a single Federal Family Education Loan Program ("FFELP") lender?

If you have some of your loans with the Direct Loan Program or Perkins and some with one FFELP lender*, then you may qualify for a process where we will move forward with consolidating your Direct loans or Perkins in one ScholarPoint loan and then use a form called the "180 Day Add-on" to roll or add your FFELP lender loans into that loan. This may seem complicated, but under current guidelines, the Direct Loan Program is not considered a private lender. What this means is that the private lender you have some of your loans with is the first lender you may be able to work with.

This process requires we fund your loan in two stages using one additional form, the 180 Day Add-on form. In the first stage, we will consolidate only your Direct loans. You will receive a notice from us indicating the completion of this stage. Once your Direct loans have been paid off, we automatically consolidate your remaining loans using the 180 Day Add-on form. We estimate up to six weeks for each stage in the process with no additional work on your end.

Who Should Consolidate?

Students and parents who have large federal education loan debt or high monthly payments consider a Federal Consolidation loan. Federal Consolidation loans are ideal for borrowers who have high monthly payments and prefer to lower them. Also, many borrowers that have several federal education loans with different lenders or different due dates, find consolidation an attractive option.

What are the benefits and advantages to consolidating?

  • Lower Monthly Payments: Most federal education loans have a maximum repayment period of ten years. A consolidation loan allows you to extend the term up to 30 years, which may lower monthly payments by as much as 63%.
  • Interest Rate Cap Reduction: PLUS loan borrowers automatically receive a reduction in the interest rate cap from 9% to 8.25%.
  • One Convenient Payment: You only need to make one payment a month versus multiple payments with different due dates to different banks.
  • One Fixed Interest Rate: A Consolidation Loan is a fixed rate that will never increase.
  • No Penalty For Early Repayment: You may prepay your Consolidation loan at any time without penalty.
  • Four Repayment Plans: ScholarPoint offers a Graduated Payment Plan, a Level Payment Plan, an Income Sensitive Payment Plan, and an Extended Payment Plan depending on your needs.
  • Simple Loan Application Process: Applying for a Consolidation loan is hassle-free. There are no credit checks, application, origination, or processing fees.

What are the eligibility requirements to consolidate loans?

If you are in repayment on two or more of the eligible loans borrowed through the Federal Family Education Loan Program (FFELP) or the Federal Direct Loan Program, you are probably eligible for a ScholarPoint Federal Consolidation (click here to see a list of loan types).

Consolidate While in School

Consolidate While in School

Can I consolidate while I am still in school?

Yes, you can. When you take out a loan for yourself while in school, your loan is automatically placed in an "In-School" status so that you do not have to make payments while enrolled. Typically, you would wait until you are finished with school before you consolidate. There is a six-month period after you finish school, called a grace period before you have to make payments. While in school and in the six-month grace period, you receive a lower interest rate on Stafford loans. Also during this time, the government pays the interest you accrue on subsidized loans.

One of the reasons you will want to consolidate while in school is the current low-interest rates. Interest rates will go up on July 1st! After July 1, 2006 borrowers will no longer be allowed to consolidate while they are in school. Although you will lose your six-month grace period when you consolidate your loans, you will lock in the current low-interest-rate on your loans. As rates increase, the lower fixed rate will save you hundreds of dollars over the life of your loan.

In order to consolidate while in school, you must first request an early conversion to repayment from your current loan holder. Then, in order to capture the lower in-school rate, request an in-school deferment on the underlying loans. Now, finish the application process with ScholarPoint for the new Consolidation loan. If you are still attending school after the ScholarPoint Consolidation loan is complete, you can place your new loan in an in-school deferment for the remainder of the time that you are enrolled and not have to make a payment (as well as having the government pay the interest you accrue on subsidized loans).

Where do I start so that I can consolidate my loans while I am still in school?

Follows these easy steps:

  • Apply for a Consolidation loan with ScholarPoint.
  • At the Get Started page, enter your enrollment as “Enrolled half-time or more”.
  • Call your current lender/servicer to change the status of your loan so that you are converted to being in repayment.
  • If you want to capture the lower, in-school rate, complete an In-School Deferment form (get the form here ) and submit it to your current lender/servicer (try to do it online or fax it in).
  • Mark the repayment question on the ScholarPoint Get Started page with “Yes”.
  • Complete the remaining steps of the ScholarPoint online consolidation application process. Be sure to E-Sign your application.
  • ScholarPoint will begin processing immediately.
  • You can check the status of your loan by going to the My Account page at any time. Also, watch your email as we will keep you updated regularly on our progress.
  • If you are still in school after the consolidation is complete (about four to six weeks from the date of your E-Signature), and you do not want to make payments until you are out of school, then click here for the appropriate deferment form.

If I am still in school, will I have to make payments right away?

Not necessarily. If you are still in school, you can place your new Consolidation loan into an in-school deferment status (get the form here). By doing this, you will not have to make a payment until you are finished with school. Once you consolidate, there will no longer be a grace period; however, locking in a lower rate could be more valuable over the life of the loan than the grace period. Additionally, during the in-school deferment, the government will still pay your subsidized loan interest.

When will my payments start? Before I consolidated, I had a grace period to look forward to.

You have options. You can begin paying right away or defer your payments. Federal regulations dictate that your grace period ends upon the funding of a Consolidation loan. If you are having difficulty making your student loan payments, ScholarPoint can offer you a way to defer payments for up to six months by putting your loan into a forbearance status. You will get the benefit of not making payments for six months. Your grace period will have ended and you will be responsible for the accrued interest during this period. If you would like to complete a forbearance form now and have us submit it for you, please click here.

What happens to my grace period when I consolidate?

You have the option of consolidating your student loans during your grace period and taking advantage of the 6/10th of a percent rate discount during your grace period. It is important to remember that when you consolidate your loan during your grace period, your loan will immediately enter repayment. In order to receive the grace period rate on your Consolidation loan, you should submit your application at least 60 days before your grace period expires. You can submit it sooner, as well as entering a Grace End Date on the application and ScholarPoint will hold your application until the appropriate time.

Electronic Signature (E-Sign)

Electronic Signature (E-Sign)

What is Electronic Signature?

ScholarPoint’s Sign Online™ e-signature feature is a way for you, the borrower, to completely apply for a loan online. There is no paper produced for you to physically sign. We use your personal information to allow you to self-authenticate using a hidden password that only you can see. An E-Signature replaces the need to physically sign and carries with it the same obligation to repay the loan.

Why should I E-Sign my application?

More and more industries are realizing an increased usage of online tools. Online banking, online bill paying services, and online merchandise ordering are just a few examples. E-Signing gives you the ability to complete every step of your loan with ScholarPoint online without additional requirements. This eliminates the need for extra paperwork, and as a result, the time to fund your loan is drastically reduced.

Is E-Signature safe and secure?

Yes. ScholarPoint has taken every precaution to ensure that your electronic signature is as secure, or more, than traditional “wet” signatures”. We follow strict industry guidelines for e-signatures and protect your signature with marketing-leading firewall technology and industry-standard SSL encryption.

Can I choose not to E-Sign my application?

Yes. You can click on the “View the Application” link on the E-Sign page, print the application, and mail it to:

ScholarPoint Financial, Inc.

3252 Holiday Court, Suite 112

La Jolla, CA 92037

Please be aware that printing, signing, and mailing the application will significantly delay the processing of your loan.

How do I rescind or cancel an E-Signature?

Once you have submitted your E-Signed application we immediately begin processing. In order to cancel that processing, we require a call from you, and possibly a written notification, at least ten days prior to the funding of the loan. Because the timing of funding can be between four and six weeks from the date of your E-Signature, it is critical that cancellation happens early in the process. Once the loan is funded (including ten days prior to funding) the loan is not reversible and cannot be canceled.

Interest Rates and Other Costs

Interest Rates and Other Costs

How is the interest rate calculated?

Every student loan lender must use a regulated formula to determine your base consolidation rate. The interest rate determined by this federal formula is the weighted average of interest rates on the loans consolidated, rounded up to the nearest 1/8th of one percent or 8.25%, whichever is less. The interest rate is fixed for the term of the loan. Please see our calculator to run your numbers.

How does ScholarPoint calculate its published rates for federal student loans?

Consolidation Loan:

  • Based on the consolidation program offered by ScholarPoint Financial, Inc.
  • Assumes a client qualifies and obtains a ScholarPoint Consolidation loan while in a grace or deferment period with the 0.50% discount for setting up auto-debit applied and a 1.00% discount for 24 continuous, on-time payments applied (meaning actual rate as of the 25th month of repayment).
  • Assumes the borrower had all loans to be consolidated disbursed on or after 7/1/98.
  • The formula to determine the base consolidation rate is a weighted average of interest rates on the loans consolidated, rounded up to the nearest 1/8th of one percent or 8.25%, whichever is less.

What are interest rate discounts or borrower discounts?

Often called "incentives" or "borrower benefits", discounts are earned rate decreases. At ScholarPoint, we provide a rate decrease of .50% if you apply for auto-debit payment. We also offer a rate decrease of 1.00% if you make your initial 24 continuous monthly payments on-time and maintain a current account.

How did ScholarPoint determine the possible consolidation savings displayed on the home page and in the calculators?

We had to make some assumptions. Our financial models typically assume that a borrower has loans post-1998 to consolidate and that they will obtain, at a minimum, our auto-debit benefit. We compare a standard Stafford or PLUS repayment schedule with a Consolidation loan using the Graduated payment plan. We assume that a lower monthly payment is an objective, so we quote using the Graduated payment plan so that the first term is interest only.

Once I receive the discounts, will my payment be re-calculated?

Each time your rate is reduced with one of ScholarPoint’s discounts, the amount of interest you pay each month is reduced. As a result, you pay more towards the principal of your loan – which helps you pay off the loan sooner and save thousands in interest costs. Your monthly payment would remain the same. However, you may be eligible to change your standard payment plan to a graduated plan – which would reduce your monthly payment.

Are there other costs associated with consolidation?

There are no fees or hidden costs of any kind associated with a ScholarPoint Federal Consolidation loan. There are no closing costs or prepayment penalties, and no credit checks.

The Consolidation Process

The Consolidation Process

How long will I have to repay?

Your repayment terms are determined by your total indebtedness, including all outstanding education loans. Repayment terms range from 10 to 30 years. Please see our Repayment Options section for additional details.

Do I have to extend the repayment term?

No. Your ScholarPoint Consolidation loan gives you the flexibility to control your loan term and interest costs by allowing you to select a repayment term that works for you. This term may be selected after your Consolidation loan has been fully processed.

I would like more information on the Income Sensitive repayment option

This repayment plan is available only after the required documentation is sent to the loan repayment servicer. You can obtain this documentation by clicking here; however, you must wait to apply until you have received your disclosure statement. With this plan, your payments are based upon your income and are adjusted annually. This plan may be suited for you if you are experiencing extreme financial problems and may be in danger of defaulting on your loans. You have to qualify for this plan.

Key Factors

  • Payment obligations are calculated based on the current income level and are adjusted annually based on expected total income.
  • Payments must cover the interest that accrues between scheduled payments.
  • Higher finance charges over the life of the loan.

Will I retain my interest subsidy?

You can consolidate Subsidized Stafford loans with other loans without sacrificing your eligibility for an interest subsidy. If at a later date, you request and qualify for any type of deferment, the federal government will pay the interest that accrues on the portion of your consolidation loan that repaid Subsidized Stafford loans. You would be responsible, however, for paying the interest that accrues on the remainder of the loan.

How do I opt out of getting my Notice of Disclosure online and getting a paper copy of the Notice of Disclosure mailed to me?

If you would like to receive a paper version of the disclosure statement, you can either print the version that we send you or call us and we will print and mail a copy to you.

Can I add other eligible student loans after I consolidate?

Yes. The addition must be completed within 180 days of the original date of consolidation. After the 180-day period, you may combine subsequent, eligible loans in a new Consolidation loan.

Should I keep making payments on my student loans while I’m waiting for my Consolidation loan to be processed?

Yes. Please continue to make all regular payments. You will be notified by mail when your ScholarPoint Federal Consolidation loan has been completed. You will receive a repayment schedule at the time of disclosure.

When will I have to make my first payment?

Typically, your first payment is due within 30 to 60 days after the consolidation has been made. We recommend and assign a repayment date 30 days from the loan being made. Processing can typically take up to eight weeks, although ScholarPoint is often able to complete the process much more quickly.

Will I pay more in interest if I consolidate my student loans?

There is no prepayment penalty on student loans, so you are not required to pay more interest; however, the longer you take to repay a loan, the more interest you pay. It is important to keep in mind that Federal Student loans carry a relatively low-interest rate compared to typical consumer loans. They also often have tax advantages.

What if I can't make my payments this month?

If changing payment plans do not ease the burden, you still retain all of your deferment and forbearance benefits and can take advantage of those options.

Who is the loan servicer?

A loan servicer handles the daily management and administration of your student loan throughout repayment. The servicer does not own your loan, but just handles the billing, payment tracking, review of deferment requests, and maintenance of your loan. At ScholarPoint, we partner with industry-leading services to ensure you receive the best service available. It is important to always pay attention to correspondence from your servicer as well as your lender.

* A FFELP lender is one that is a licensed entity within the Federal Family Education Loan Program (FFELP) and is not affiliated with the William D. Ford Direct Loan Program.