On January 2, 2014, we implemented the first phase in bringing closure to the existing loan consolidation system and transitioning to a new Direct Consolidation Loan process. As explained previously (November 27, 2013), we are making these changes in preparation for the end to our contract with ACS (Xerox).
In the first phase of the transition, some consolidation applicants will begin using the new Direct Consolidation Loan process while other consolidation applicants will continue using the existing loan consolidation process. Later, in the second phase, all applicants will use the new Direct Consolidation Loan process. The second phase is targeted for implementation in spring 2014.
We present the information in this announcement as follows:
Two Direct Consolidation Loan Processes During Phase One of Transition
Given that we have two Direct Consolidation Loan processes during the first phase of the transition, it is important to understand which applicants will use each process. Regardless of the process used, the primary action on the part of an applicant is to complete and submit the Federal Direct Consolidation Loan Application and Promissory Note. We will refer to the Federal Direct Consolidation Loan Application and Promissory Note as the “application” throughout the rest of this announcement.
Existing Process on Direct Consolidation Loans Web Site
A consolidation applicant will use the existing loan consolidation application process on the Direct Consolidation Loans Web site if the applicant
The Direct Consolidation Loans Web site is available at www.loanconsolidation.ed.gov.
Note: If preferred, an applicant will also be able to download and print a paper application from the Direct Consolidation Loans Web site for submission by U.S. mail.
New Process on StudentLoans.gov Web Site
A consolidation applicant will use the new Direct Consolidation Loan application process on the StudentLoans.gov Web site if the applicant
The StudentLoans.gov Web site is available at www.studentloans.gov.
New Direct Consolidation Loan Process – Applicant Information
An applicant who uses the new Direct Consolidation Loan process will sign in to StudentLoans.gov using his or her personal identifiers and Federal Student Aid PIN to electronically complete the Federal Direct Consolidation Loan Application and Promissory Note.
Note: Although we strongly encourage electronic completion of the application, an applicant will be able to download and print a paper application from StudentLoans.gov for submission by U.S. mail.
The electronic application on StudentLoans.gov consists of five steps: 1 – Choose Loans & Servicer, 2 – Repayment Plan Selection, 3 – Terms & Conditions, 4 – Borrower & Reference Information, and 5 – Review & Sign.
In this step, a National Student Loan Data System (NSLDS) lookup will be performed, and information about an applicant’s federal education loans will populate within the application. The applicant will have the opportunity to add loans to and/or remove loans from the information obtained from the NSLDS.
Also in this step, an applicant who has at least one loan that is still in the grace period and wants to consolidate that loan will be able to select to have the processing of his or her application delayed until closer to the end of the grace period.
Finally in this step, an applicant will choose the federal loan servicer that he or she wants to complete the consolidation. We have four consolidation
servicers—FedLoan Servicing (PHEAA), Great Lakes Educational Loan Services, Inc., Nelnet, and Sallie Mae—from which an applicant may choose.
In this step, an applicant will select the repayment plan under which he or she wants to repay the Direct Consolidation Loan. When making this selection, an applicant who is interested in one of the “income-driven” repayment plans will be able to complete the Electronic Income-Based Repayment (IBR)/Pay As You Earn/Income-Contingent Repayment (ICR) Plan Request as part of the Direct Consolidation Loan process.
In this step, an applicant will review terms and conditions as well as the Privacy Act notice.
In this step, an applicant will enter address, contact, employer, and reference information.
In this step, an applicant will review information and edit, if necessary, before signing and submitting the Federal Direct Consolidation Loan Application and Promissory Note.
Note: An applicant who is logged in to StudentLoans.gov and completing the electronic application may request technical assistance by clicking on the Contact Us tab in the top menu bar of StudentLoans.gov. The applicant can 1) complete and submit the feedback form or 2) click on Additional Information and contact the Student Loan Support Center at the phone number provided.
Once an applicant submits his or her application electronically via StudentLoans.gov or by mailing a paper application, the consolidation servicer will complete the actions required to consolidate the applicant’s eligible loans. The consolidation servicer will be the applicant’s point of contact for questions related to his or her consolidation application.
Key actions that the consolidation servicer will complete include the following:
New Direct Consolidation Loan Process – Loan Holder and Servicer Information
As we explained in our November 27th announcement, loan holders and
servicers—Federal Perkins Loan schools and Federal Family Education Loan Program lenders and lender servicers—will have the same role in the new Direct Consolidation Loan process as they have in the existing loan consolidation process. The difference will be that loan holders and servicers will interact with multiple consolidation servicers instead of just one.
The four consolidation servicers for the new Direct Consolidation Loan
process—FedLoan Servicing (PHEAA), Great Lakes Educational Loan Services, Inc., Nelnet, and Sallie Mae—have been reaching out to loan holders and servicers to establish preferences and contacts for the exchange of verification certificates and payoff manifests. We appreciate the response to the new consolidation servicer outreach and look forward to ongoing efforts by loan holders and servicers to ensure a smooth consolidation experience for applicants.
Key actions that a loan holder or servicer will complete include the following:
We will post additional process-related information for loan holders and servicers in a forthcoming Electronic Announcement.
Contact Information
We appreciate the financial aid community’s support as we bring closure to the existing loan consolidation system and transition to a new Direct Consolidation Loan process.
General information about Direct Consolidation Loans is available on the StudentAid.gov Web site at http://studentaid.ed.gov/repay-loans/consolidation.
Contact information associated with the two Direct Consolidation Loan application processes is available on the IFAP Web site’s Loan Consolidation for Applicants page and Loan Consolidation for Loan Holders and Servicers page.