2. Confused about student loan consolidation? Don’t worry! Help is on the way!

3. Howdy, I’m the Loan Arranger!

4. A Direct Consolidation Loan combines one or more of your federal education loans into one new loan.

5. 1. Advantages CONSOLIDATION TRAIL Click on any sign to head down the trail. 5. Consolidation Process 3. Eligibility 4. How to Apply 6. Finish 2. Before You Decide

6. How do you benefit from a Direct Consolidation Loan? Advantages

7. the advantages No fees and no minimum or maximum loan amounts No one is excluded based on the size of his or her student loan debt. Consolidation is FREE!

8. the advantages One lender, one monthly payment Having only one lender and one payment makes it easier to manage your debt. Your new lender will be the U.S. Department of Education!

9. the advantages Flexible repayment options Four convenient plans Standard Repayment Plan Extended Repayment Plan Graduated Repayment Plan Income Contingent Repayment Plan... Did you know that you can switch your repayment plan at any time?

10. Standard Repayment Plan With standard repayment, you make a fixed payment of at least $50 a month for up to 10 years. Graduated Repayment Plan With graduated repayment, your payments start out low, then generally increase every two years. The length of your repayment period varies from 12 to 30 years. Extended Repayment Plan With extended repayment, you make fixed payments of at least $50 a month over a period that varies from 12 to 30 years. Income Contingent Repayment Plan With income contingent repayment, your monthly payments are calculated on the basis of your annual income. The maximum repayment period is 25 years.

11. the advantages A lower interest rate If you consolidate while enrolled in school or during your grace period, you may receive a lower interest rate. This lower rate could save you thousands of dollars in interest.

12. A second chance for borrowers in default Consolidating your defaulted student loans will limit further collection costs and may reinstate your federal student aid eligibility. Consolidating your defaulted student loans can help rebuild your credit rating! the advantages

13. the advantages, in summary No fees and no minimum or maximum loan amounts One lender, one monthly payment Flexible repayment options A lower interest rate A second chance for borrowers in default

14. What should you think about before deciding on a Direct Consolidation Loan? Before You Decide

15. before you decide, consider... What your interest rates are for each loan Consolidating may offer a lower interest rate than your current loans. The interest rate for a Direct Consolidation Loan is fixed and cannot exceed 8.25 percent.

16. What you can afford to pay each month If you’ve exhausted your deferment and forbearance options and are still having trouble making monthly payments, consolidation may help. before you decide, consider... Consolidation can help you ease your financial burden.

17. How much you’re willing to pay over the long term Making smaller monthly payments or lengthening the time it takes to pay off your student loans increases the total amount you repay. before you decide, consider... The faster you pay off your student loans, the less you’ll pay in interest!

18. How many payments you have left on your loans If you’re close to paying off your student loans, you may not want to consolidate. before you decide, consider... It may not be worth the effort if you’re almost paid off.

19. What your current lenders offer Your current lenders may offer loan options and repayment plans that meet your needs better than a Direct Consolidation Loan. before you decide, consider... Check with your current lenders!

20. what to consider, in summary What your interest rates are for each loan What you can afford to pay each month How much you’re willing to pay over the long term How many payments you have left on your loans What your current lenders offer

21. Are you eligible for a Direct Consolidation Loan? Eligibility

22. Excuse me, Loan Arranger, but may I jump to the eligibility information that applies to me? Certainly! Just click on a sentence below. I’m still in school. I’m out of school. My loans are in default. My spouse and I both have loans. I’m a parent borrower. I want to see a list of eligible loans. I want to see a list of ineligible loans. I want to go back to the trail.

23. in-school eligibility HINT! Want to take advantage of a possible lower in-school interest rate and maximize your entire grace period? Apply for consolidation after your last loan is disbursed and before you graduate! While in school, you are eligible if you— Attend a Direct Loan school at least half-time and Consolidate at least one Direct Loan or Federal Family Education Loan (FFEL) in an in-school period OR Attend a non-Direct Loan school at least half-time, Have at least one Direct Loan, and Consolidate at least one Direct Loan or FFEL in an in-school period. Confused? How to contact us...

24. When out of school, you are eligible if you— Consolidate at least one Direct Loan OR Consolidate at least one Federal Family Education Loan (FFEL) and Are unable to obtain either a Federal Consolidation Loan or one with acceptable income-sensitive repayment terms with an FFEL Program lender. Click HERE for an important note if you are in your grace period.HERE out-of-school eligibility Confused? How to contact us...

25. important note for borrowers in their grace period By consolidating your loans during your grace period, you may receive a lower interest rate. Beware! You will go into repayment as soon as you consolidate. If you apply too early in your grace period, you may not be able to take full advantage of your time in grace. Confused? How to contact us...

26. Don’t forget — you are charged collection costs on your defaulted loan(s). These charges are added to your loan amount and your interest fees. in default eligibility While in default, you are eligible if you— Consolidate at least one Direct Loan and Agree to repay under the Income Contingent Repayment (ICR) Plan or have made satisfactory repayment arrangements on the defaulted loan(s) OR Consolidate at least one Federal Family Education Loan (FFEL), and Have been unable to obtain either a Federal Consolidation Loan or one with acceptable income-sensitive repayment terms with an FFEL Program lender, and Agree to repay under the ICR Plan or have made satisfactory repayment arrangements on the defaulted loan(s). Confused? How to contact us...

27. joint consolidation eligibility ATTENTION! Click HERE for a very important note regarding consolidating jointly with your spouse.HERE As married borrowers, you are eligible if both of you— Consolidate at least one Direct Loan OR Consolidate at least one Federal Family Education Loan (FFEL) and Are unable to obtain either a Federal Consolidation Loan or one with acceptable income-sensitive repayment terms with an FFEL Program lender. Confused? How to contact us...

28. important note for married borrowers Spouses may wish to consolidate SEPARATELY! In the case of divorce, the consolidated loan cannot be unconsolidated. If one spouse dies or becomes totally and permanently disabled, the other spouse is still responsible for repayment of the entire consolidated loan. Note: When a single borrower dies or becomes totally and permanently disabled, the consolidated loan is discharged. With a joint consolidation loan, BOTH spouses must qualify for forbearance, deferment, or discharge! Confused? How to contact us...

29. As parent borrowers, you are eligible if you— Consolidate at least one Direct PLUS Loan or Federal PLUS Loan AND Meet the eligibility requirements for your own status. I’m in school. I’m out of school. I’m in default. Click on the underlined sentence at right that describes your status. parent borrower eligibility Confused? How to contact us...

30. in-school parent borrower eligibility As a parent borrower in school, you are eligible if you— Attend a Direct Loan school at least half-time and Consolidate at least one Direct Loan or Federal Family Education Loan (FFEL) in an in-school period OR Attend a non-Direct Loan school at least half-time, Have at least one Direct Loan, and Consolidate at least one Direct Loan or FFEL in an in-school period. Confused? How to contact us... A parent PLUS loan does NOT qualify as an in-school loan. However, if parent borrowers have other eligible loan(s) during an in-school period, they can combine them with their parent PLUS loan(s).

31. Parent borrowers are out of school if they are making scheduled payments, in deferment, forbearance, or their grace period. As a parent borrower out of school, you are eligible if you— Consolidate at least one Direct Loan OR Consolidate at least one Federal Family Education Loan (FFEL) and Are unable to obtain a Federal Consolidation Loan from an FFEL Program lender AND Have adequate credit, or Have someone with adequate credit co-sign for the PLUS portion of the loan, or Document extenuating circumstances. Confused? How to contact us... out-of-school parent borrower eligibility

32. If you default on a Direct Consolidation Loan that contained a previously defaulted loan, you may not consolidate that loan again. in default parent borrower eligibility As a parent borrower in default, you are eligible if you— Consolidate at least one Direct Loan OR Consolidate at least one Federal Family Education Loan (FFEL) and Are unable to obtain a Federal Consolidation Loan from an FFEL Program lender AND Have made satisfactory repayment arrangements on the defaulted loan(s) AND Have adequate credit or Have someone with adequate credit co-sign for the PLUS portion of the loan, or Document extenuating circumstances. Confused? How to contact us...

33. Direct Subsidized and Unsubsidized Loans Federal Subsidized and Unsubsidized Stafford Loans Direct PLUS Loans and Federal PLUS Loans Direct Consolidation Loans and Federal Consolidation Loans Guaranteed Student Loans Federal Insured Student Loans Federal Supplemental Loans for Students Auxiliary Loans to Assist Students Federal Perkins Loans* National Direct Student Loans* National Defense Student Loans* Health Education Assistance Loans* Health Professions Student Loans* Loans for Disadvantaged Students* Nursing Student Loans* *Loans not eligible for in-school consolidation eligible loans

34. Loans made by a state or private lender and not guaranteed by the federal government, for example — Primary Care Loans Law Access Loans Medical Assist Loans PLATO Loans ineligible loans

35. How do you apply for a Direct Consolidation Loan? How to Apply

36. Call us For an application package and help filling out the forms For answers to your questions about Direct Consolidation Loans For estimated repayment amounts under each of our four repayment plans 1-800-557-7392Toll Free 1-800-557-7395 TTD 1-888-758-9730 Fast Track (if you have only Direct Loans) 334-206-6001International Number how to apply

37. Visit our web site Use the interactive calculator to compare repayment amounts under each of our four repayment plans and to calculate your weighted average interest rate Download Direct Consolidation Loan application materials Apply on-line for a Direct Consolidation Loan www.loanconsolidation.ed.gov how to apply

38. How is your Direct Consolidation Loan application processed? Consolidation Process

39. step 1: we review your application We review your application for completion and contact you if any additional information is needed.

40. step 2: we contact your loan holders Using the information from your application, we contact your loan holder(s). We verify each loan’s eligibility for consolidation and its current “payoff” balance (including any accrued interest, fees, or collection costs).

41. step 3: we may contact credit agencies and the irs If you select the Income Contingent Repayment Plan, we must contact the IRS to verify your income information. If you are consolidating parent PLUS loans, we conduct a credit check to ensure that you have an adequate credit history.

42. step 4: we send you a loan statement After we accept your application, we send you a loan statement listing all the loans being consolidated. We allow a 10-day waiting period for any of your adjustments and corrections.

43. step 5: we buy your loans If we do not hear from you within this 10-day period, we pay off your loan holder(s) and consolidate your loans.

44. step 6: we set up your account Once your loans are successfully consolidated, we create your account with the Direct Loan Servicing Center. After they send you a welcome letter and repayment information, they collect your payments.

45. Well, partner, you’ve come to the end. Good Luck and Happy Trails to you! Remember, consolidation can put you on the trail to successful debt management.

46. Consolidation Help Glossary How to Contact Us Acknowledgements

47. Accrue To be added over time. For example: Interest accrues over the life of the loan. See Interest Rate. Adverse Credit History Negative credit history as a result of delinquency on any loan or debt as reported by a credit agency. Borrower An individual who has applied for and received a loan. A borrower signs a promissory note, agrees to its terms, and is responsible for repaying his/her loan. Capitalization When accrued interest on a loan is added to the outstanding principle balance. See Accrue. Collection Costs The costs a lender or its agents incurred collecting payments not paid when due. A lender may require that a borrower or an endorser pay the collection costs. See Endorser. Consolidation Combining one or more loans into a single loan. Glossary 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 1234567891011

48. Collection of a defaulted loan The Direct Loan program may take any action authorized by law to collect a defaulted Direct Loan including, but not limited to, filing a lawsuit against the borrower, reporting the default to national credit bureaus, requesting the Internal Revenue Service offset the borrower’s Federal income tax refund, and/or garnishing the borrower’s wages. See Default. Default Failure to repay a loan according to the terms agreed to when a borrower signed a promissory note. Default also may result from failure to submit requests for deferment, forbearance, or discharge. See Deferment. See Discharge. See Forbearance. Deferment Temporary postponement of payments on a loan. Delinquent A borrower’s account where the payment is past due. An account remains delinquent until a borrower makes the account current with payment, deferment, or forbearance. See Deferment. See Forbearance. Direct Consolidation Loan A loan that allows students and parents to consolidate several student loans into one loan. Glossary 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 1234567891011

49. Direct Loan Servicing Center The U.S. Department of Education's agent that is contracted to collect payments on Direct Loans. The Servicing Center also handles requests for deferments and changes in repayment options. See Deferments. See Repayment Plans. Direct Subsidized Loan Also referred to as Federal Direct Stafford/Ford Loan. A loan from the U.S. Department of Education made to students meeting specific eligibility requirements. The federal government does not charge interest on subsidized loans while borrowers are enrolled in school at least half-time, during their six-month grace period, or during authorized periods of deferment. See Deferment. See Grace Period. See Half-time. See In-school Period. Direct Unsubsidized Loan Also referred to as Federal Direct Unsubsidized Stafford/Ford Loan. A federally financed student loan made to students meeting specific eligibility requirements. Interest is charged throughout the life of the unsubsidized loan. The borrower may choose to pay the interest charged on the loan as it accrues or allow the interest to be capitalized. See Accrue. See Capitalization. Disbursement The transfer of loan proceeds to a borrower, a school, or an escrow agent by a lender. Glossary 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 1234567891011

50. Discharge The release of borrowers from their obligations to repay part or all of their loans. Disclosure Statement A statement that is sent to the borrower by the lender when the loan is disbursed and at the beginning of the repayment period that contains information about the terms of their loans: the actual cost of a loan, accrued interest, any assessed fees, and the number of payments. See Accrue. See Collection Costs. See Interest Rate. Endorser A person, other than the borrower, who co-signs the promissory note. An endorser is responsible for repayments of the loan if the borrower fails to fulfill his/her repayment obligations. Expected Family Contribution (EFC) The amount a student and a student's family are expected to contribute toward college costs. The U.S. Department of Education calculates a student's EFC based on information provided on the Free Application for Federal Student Aid (FAFSA). Extended Repayment Plan With the Extended Repayment Plan, a borrower makes fixed payments of at least $50 a month over a period that varies from 12 to 30 years. Glossary 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 1234567891011

51. Federal Consolidation Loans A Federal Consolidation Loan allows you to combine different types of federal student loans into one loan. The lender is a Federal Family Education Loan (FFEL) Program lender. Federal Direct Loan Program The William D. Ford Federal Direct Loan Program, also referred to as Direct Loan Program, is a federal program that provides loans to student and parent borrowers directly through the U.S. Department of Education. Federal Direct Stafford/Ford Loan See Direct Subsidized Loan. Federal Direct Unsubsidized Stafford/Ford Loan See Direct Unsubsidized Loan. Federal Direct PLUS Loan See PLUS loans. Federal Family Education Loan (FFEL) Program Under the FFEL Program, private lenders provide loan principal for Federal Stafford Loans (for student borrowers) and Federal PLUS Loans (for parent borrowers). The federal government guarantees the loan. Glossary 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 1234567891011

52. Federal Perkins Loan A low-interest (5 percent) loan for both undergraduate and graduate students with exceptional financial need. The loan is made with government funds with a share contributed by the school. A borrower’s school is the lender, and a borrower must repay the Perkins Loan to their school. Forbearance A postponement of payments or a reduction in monthly payments for a limited and specified period of time during which a borrower is willing but unable to make payments. Graduated Repayment Plan With the Graduated Repayment Plan, a borrower’s payments start out low, then generally increase every two years. The length of a borrower’s repayment period varies from 12 to 30 years. Grace Period The 6-month period that occurs between a borrower’s separation date from their school and the first payment date on a loan. The grace period starts the day after a borrower ceases to be enrolled at an eligible school at least half-time. During the grace period, interest on a subsidized loan is not charged to the borrower. However, interest on an unsubsidized loan does accrue during the grace period and must be paid by the borrower or allowed to capitalize. PLUS loans do not have a 6-month grace period following the disbursement of the loan or the separation date. These loans go into repayment 30-60 days after they are disbursed. See Accrue. See Half-time. See In-School Period. See Interest Rate. See PLUS loans. Glossary 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 1234567891011

53. Guaranty Agency The organization that administers the FFEL Program for your school. The federal government sets loan limits and interest rates, but each guaranty agency is free to set it own additional limitations, within federal guidelines. Half-time To be enrolled half-time is to be taking the minimum number of hours or credits required to be considered in-school. See In-School Period. Income-Contingent Repayment (ICR) Plan With the Income-Contingent Repayment (ICR) Plan, a borrower’s monthly payments are calculated on the basis of his/her annual income. The maximum repayment period is 25 years. In-School Period A student loan is considered to be in an in-school period if it is not in grace or repayment. A loan is considered to be in an in-school period if the borrower entered but never completed the grace period because the borrower re-enrolled at least half-time at an eligible school before the grace period expired. See Grace Period. Interest Rate The interest rate for Direct Consolidation Loan is based on the weighted average of the interest rates on the loans being consolidated, rounded to the nearest higher one-eighth of one percent. The rate is fixed and will not exceed 8.25%. Borrowers may use our interactive calculator at www.loanconsolidation.ed.gov to determine their weighted average interest rate.www.loanconsolidation.ed.gov Glossary 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 1234567891011

54. Joint Consolidation When married borrowers decide to consolidate their loans jointly. Both parties are accountable for the entire consolidation loan until it is paid in full. A joint consolidation can never be unconsolidated. Regular Consolidation A borrower can consolidate when his or her loans are no longer in an in-school period, i.e. during the grace period, while in repayment, or in default. A borrower consolidating at least one fully disbursed Direct Loan or FFEL, none of which is in an in-school period, may consolidate under what is known as the regular Direct Consolidation Loan process. A borrower may also include other student loans, such as Federal Perkins Loans and eligible health profession student loans. Repayment Generally, the first payment on a loan is due within 60 days after consolidation. Repayment Plan(s) In the Direct Loan Program, borrowers may select from four plans that will determine the length of their repayment period and the amount of their monthly payments. The plans are the Standard Repayment Plan, Extended Repayment Plan, Graduated Repayment Plan, and Income-Contingent Repayment (ICR) Plan. See Extended Repayment Plan. See Graduated Repayment Plan. See Income-Contingent Repayment (ICR) Plan. See Standard Repayment Plan. Glossary 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 1234567891011

55. Repayment Schedule A statement provided by the Direct Loan Servicing Center to the borrower that details the amount of the loan principal and interest due in each repayment installment and the number of payments that will be required to pay off the loan in full. Additionally, a repayment schedule traditionally lists the loan’s interest rate, the due date of the first loan payment, and the frequency of loan payments. See Direct Loan Servicing Center. Satisfactory Repayment Arrangements For the purpose of consolidating a defaulted Federal Family Education Loan (FFEL) or Direct Loan, three consecutive, voluntary, on-time, full monthly payments that are reasonable and affordable given the borrower’s total financial situation constitute satisfactory repayment arrangements. For the purpose of restoring Title IV eligibility (i.e. federal student aid eligibility), six consecutive, voluntary, on-time, full monthly payments that are reasonable and affordable given the borrower’s total financial situation constitute satisfactory repayment arrangements. (Borrowers who are in default on other federal education loans must contact their current loan holders to determine how those loan holders define satisfactory repayment arrangements.) Separation Date The actual or anticipated dates when the borrower will graduate, leave school, or drop to a less than half-time status. The separation date is used to determine a borrower's grace period and the date that the first loan payment will be due. A borrower has only one separation date on a loan. If a borrower separates from school and begins repayment on their loan, then returns to school, they will not receive another separation date. Glossary 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 1234567891011

56. Servicer An entity designated to track and collect a loan on behalf of a loan holder. Standard Repayment Plan With the Standard Repayment Plan, a borrower makes a fixed payment of at least $50 a month for up to 10 years. Status The present state of the borrower's subsidized, unsubsidized or PLUS loan(s). An account will be either: In-School, In-Grace, In-Repayment-Current, In-Repayment-Delinquent, In Deferment, In Forbearance, Paid-in-Full. Student Financial Assistance (SFA) Programs SFA refers to programs administered by the Department of Education’s Office of Postsecondary Education. These programs are authorized by Title IV of the Higher Education Act of 1965 and are often collectively referred to as the Title IV programs. The SFA Programs comprise the Federal Pell Grant Program, William D. Ford Federal Direct Loan (Direct Loan) Program, Federal Family Education Loan (FFEL) Program, Federal Perkins Loan (Perkins Loan) Program, Federal Work-Study (FWS) Program, Federal Supplemental Educational Opportunity Grant (FSEOG) Program, and State Grant and Scholarship Programs. Glossary 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 1234567891011

57. Subsequent Consolidation A borrower may add pre-existing eligible loans to a Direct Consolidation Loan within 180 days after the date the Direct Consolidation Loan was made. A preexisting eligible loan is one that is fully disbursed before the Direct Consolidation Loan’s first disbursement is made. Title IV Federal financial aid programs for students attending postsecondary educational institutions, authorized under Title IV of the Higher Education Act of 1965, as amended. The U.S. Department of Education administers these programs. Variable Interest Rate of interest on a loan that changes annually every July 1. For Direct Subsidized and Unsubsidized Loans, the interest rate is adjusted once a year and will not exceed 8.25%. William D. Ford Federal Direct Loan Program A federal program that provides loans to student and parents borrowers. The loans are Federal Direct Stafford/Ford Loans, Federal Direct Unsubsidized Stafford/Ford Loans, Federal Direct PLUS Loans, and Federal Direct Consolidation Loans. Funds are provided by the federal government, through participating schools or the Loan Origination Center, to eligible student/borrowers. Glossary 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 1234567891011

58. how to contact us 1-800-557-7392 Toll Free 1-800-557-7395 TTD 334-206-6001 International www.loanconsolidation.ed.gov

59. ACKNOWLEDGEMENTS Maria Catilo Harvard University (Project Manager) Erin Jewel Virginia Tech (Project Manager) Jason White Morgan State University (Technical Support)