The most difficult part of the student loan consolidation process is the application. Researching the various consolidation companies and lenders may take some time. Deciding how many more years you need to be able to pay back the loan will require some calculations. However, the application is where you list all the details of your various student loans: Making a mistake here can delay the process by weeks or months.
You will need to use a student loan consolidation company or a bank once you decide to consolidate your loans. It is imperative that you perform your research on these organizations before you ever submit an application. Submitting an application to consolidate your loans is not the same as submitting an application to attend a university. You aren’t deciding whether or not you want to go with the organization. You should have already made that decision before you ever sent in your application. In many instances, submitting an application basically gives the organization the ability to initiate the consolidating process.
What You Will Need to Provide
Each lender and consolidation company will require different information to begin the process. However, each will require information about the loans you want to consolidate. You will not be able to say you have a $5,000 loan with Bank A, a $2,000 loan with Bank B, and a $15,000 loan with Bank C. These companies will need specific details because they will be contacting the lenders directly.
Most application forms will require you to list the loan provider, account number, estimated payoff amount, and provider’s contact information. The consolidation company will contact the lender to make sure that the information you provided is accurate and the loan is eligible for consolidation. The company will come back to you if the information you provided does not match the lender’s details. If they determined you intentionally lied, your application will be denied.
You will often be asked to submit a repayment plan selection on your application. This selection will determine how many additional years you have to repay the money. Since you usually have just one chance to consolidate your loans, pick your plan wisely. Do not grossly overestimate the number of additional years you need to pay back the loan. However, give yourself enough time to account for any unexpected events that may arise.
Some organizations will ask you to list student loans that you do not want to consolidate. You may think this information is irrelevant, but it can assist you in picking your repayment plan. They will not contact these organizations about your consolidation plans. However, some people are uncomfortable about giving out too much information. If the section is optional, you might consider doing these calculations on the side.
Signing a promissory note will also be required. Once you agree to let the company consolidate your loans, you are essentially severing all ties with your original lenders. The consolidation company or bank will pay off your original loans and bill the remaining balance directly to you each month. A promissory note states that you understand this agreement and will pay your debts per the repayment schedule. It will also detail what happens if you default on the loans and the fees associated with defaulting.
You will need to have a steady monthly income in order to be eligible for student loan consolidation. Some companies will require you to fill out an IRS disclosure form to check your income. Others may ask for a pay stub or a letter from your company’s payroll department. They will never just take your word.
Do not be surprised if a consolidation company or bank asks you for references, too. They are taking a financial risk on you and want to ensure that they are making the right decision. You are often asked to provide at least two different references who have known you for three years. The references cannot live at your same address.