Student Loan Consolidation – The Process



Student Loan Debt has now surpassed credit card debt in America. New and old students find themselves in a position where they cannot start a business, purchase a home or car, or even just begin saving for their retirement. If a borrowers has Federal Student Loans, then they can pursue consolidating their student loans into the Obama Student Loan Forgiveness program.

The steps needed to consolidate student loans are not easily accomplished. Although under President Obama loan forgiveness has been somewhat simplified, navigating through the government’s bureaucracy is still very difficult. The five primary steps to qualify and one of the new payment plans will be covered here.
The first step is seeing if you qualify for a Student Loan Forgiveness consolidation. Once qualified in a five minute phone call, Student Debt Relief will assist you in choosing the repayment plan that benefits you the most. Once you choose your repayment plan, we will collect all your information and submit you for consolidation.

Next, the Department of Education verifies the loan status. For every loan, the department of education will contact your loan holder (bank or other lending institution) to examine the balance of the loan and verify that they meet the guidelines for consolidation. Even if one or all of the loans are in default, they will still qualify to be consolidated.

Once that is accomplished, a loan statement summary packet is sent to the applicant. If there are no errors, this closes the loan to the lender and the applicant will have one new consolidated loan in the Obama Student Loan Forgiveness program. Unless the loan is already in default at the time of application for consolidation, the borrower is required to continue making payments until he receives this summary packet.At the same time, payment is made to the original lender. Upon receipt of payment, the lending organization must completely discharge the debt and notify the borrower that this has been accomplished, according to federal regulations. This applies even if the Department of Education pays the original lender less than the full outstanding balance.

Once the original loan is closed, a Direct Consolidation Loan account is set up to receive payment from the borrower. Information on this account is provided to the borrower once it is set up regarding status, monthly payment and payment dates. The first payment is typically due within 60 days after the account is established.

In December of 2012, the Pay As You Earn Program was established as part of President Obama’s student debt relief plan. This new program determines eligibility based on the remaining federal student loan amount in relation to current income and when the loan was taken out. It is designed to lower monthly payments to not just make them affordable, but also allow the borrower to save income to establish new businesses, save for retirement, etc.

Most loans are eligible for the Pay As You Earn program. To begin, an applicant needs to select the Income Based Repayment Plan as a payment method and submit the request. When the response is sent, Pay As You Go will be one of the options and the person will be instructed to contact the federal loan clerk at a provided phone number to begin. This person will begin the evaluation to determine if Pay As You Go is the best option.

Requesting a student loan consolidation is not a simple process. Most people find that trying to navigate the various government websites can be very difficult and not all of the required information is readily available. Few borrowers are aware that even after a consolidation loan has been approved, they have 180 days to add another loan to it. Pay As You Earn is still such a new program that it has not been added to the application process to be considered automatically and must be specifically asked for by the borrower. Our team of professionals at can take care of all this and more. We work for you, not the bank or the government. Contact us today to get your debt under control and your life back on track.

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