FAQ's (Frequently Asked Questions)
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 fixed interest rate and a lower monthly payment. Consolidation is a bit of a misnomer because a single loan can be "consolidated" to take advantage of better loan terms.
Why should I consolidate my student loans with ScholarPoint?
Because you want to lock in your rate, lower your payment. ScholarPoint offers a complete and instant online student loan experience. You simply enter your information into our easy-to-use online form, electronically sign your promissory note and we immediately begin processing your loan.
ScholarPoint communicates with its customers via email. You will receive periodic email correspondence providing you with up-to-date status of the application process and when you can expect completion of your consolidation loan. ScholarPoint customers also have a "My Account" page where you can sign in anytime to check the status of your application.
Are there other costs associated with consolidation?
There are no fees of any kind associated with a ScholarPoint Federal Consolidation loan. There are no closing costs, prepayment penalties, or credit checks.
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 53%.
- Interest Rate Cap Reduction: The maximum interest rate on a consolidation loan is 8.25%. This will help PLUS loan borrowers repaying at a higher rate.
- One Convenient Payment: You only need to make one payment a month versus multiple payments with different due dates to different lenders.
- 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 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 you should tell any lender that may call that you already have a signed application being processed.
Often these sales people are persistent. We like to think that our online process is a way for you to avoid that high-pressure sales call.
When can I consolidate?
You can apply to consolidate anytime after you have graduated or left school.
You may also be able to consolidate if you are in school less than half time or if your loans have previously been in repayment.
What loans are eligible for a ScholarPoint Federal Consolidation Loan?
The following is a list of loans types that are eligible for consolidation:
- All Federal Stafford Loans
- All Federal Direct Student Loans
- Federal Parent Loans for Undergraduate Students (PLUS)
- Graduate PLUS Loans
- 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 (you must have multiple consolidation loans or at least one loan not previously consolidated)
What are the eligibility requirements to consolidate?
- One or more of the eligible loans from the list above.
- At least $20,000 in total loans to be consolidated.
- Loans to be consolidated are in good standing (not in default).
- If you have consolidated previously, you must have at least one additional loan not previously consolidated or you must be consolidating two previous consolidations together.
- Loans to be consolidated may be in repayment, deferment, or forbearance.
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Electronic Signature (E-Sign)
What is an Electronic Signature?
ScholarPoint’s Sign Online™ e-signature feature allows you, the borrower, to apply for a loan completely online. There is no physical signature required. 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 allows you to complete every step of your loan with ScholarPoint online. This eliminates the need for extra paperwork, and as a result, the time to fund your loan can be significantly reduced.
Is E-Signature safe and secure?
Yes. ScholarPoint has taken every precaution to ensure that your electronic signature is at least as secure as traditional physical signatures. We follow strict industry guidelines for e-signatures and protect your signature with market-leading firewall technology and industry-standard SSL encryption.
Can I choose to sign my application manually?
Yes. To do so, complete the online application until you reach the E-Sign page.
Click on the "View the Application" link.
Print the application, sign it, and mail it to:
ScholarPoint Financial, Inc.
3252 Holiday Court, Suite 112
La Jolla, CA 92037
Or, you can also call us and we will be happy to take the application over the phone and send you a copy for your signature.
Please be aware that printing, signing, and mailing the application will significantly delay the processing of your loan, because processing does not begin until the signed application is received.
How do I rescind or cancel an E-Signature?
Once you have submitted your e-signed application, we immediately begin validation and processing of your consolidation loan. In order to cancel the application, you will need to call or write to us at least ten days prior to the funding of the loan. Because the funding process can take from four to six weeks from the date of your e-signature, it is critical that a cancellation happen early in the process. Once the processing is complete (including ten days prior to funding) the loan is not reversible and cannot be cancelled.
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Interest Rates
How is the interest rate calculated?
The consolidated interest rate is a fixed rate determined by Federal guidelines. It is the weighted average of interest rates (weighted by loan amounts) for the loans being consolidated, rounded up to the nearest 1/8th of one percent. However, the maximum interest rate is 8.25%. The interest rate is fixed for the term of the loan.
Please use our calculator to determne your interest rate, payments, and payoff amounts.
How does the ScholarPoint Payment Calculator determine rates for Federal consolidation loans?
- First it determines the average wieghted interest rate of loans that are entered and rounds it up to the nearest one-eighth percent (.00125).
- The base rate assumes the borrower has variable loans to be consolidated that were originally disbursed between July 1, 1998 and July 1, 2006.
How does the ScholarPoint Home Page determine the displayed consolidation savings?
We begin with the same process as used by our payment calculator.
We compare a standard Stafford repayment rate, term, and payment schedule with a Consolidation Loan using the Graduated payment plan consolidated while in a grace or deferement period (with a 0.60% reduction).
We assume that a lower monthly payment is an objective, so the payment quoted is for the Graduated payment plan where the first payment term (of two years) is interest only.
Can I change my Payment Plan?
Yes, during the application process or after the consolidation is complete, you can contact us to request a different payment plan. There are limitations on making changes more than once a year or after the loan has been in repayment for more than one year.
What's the best time for me lock in the lowest rate?
Our Best Rate Guarantee takes the guess work out of when to lock-in the lowest possible rate for variable PLUS and Stafford loans. Our process ensures that you'll receive the best interest rate, that your specific loans qualify for, from the federal government.
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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.
What is the "Income Sensitive" repayment option?
This repayment plan is available only after the consolidation is complete.
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 subject to annual review.
This plan may be suited for you if you are experiencing extreme financial problems and may be in danger of defaulting on your loans.
Key Factors
- Payment obligations are calculated based on current income level and are adjusted annually based on expected total income.
- Payments must cover the interest that accrues between scheduled payments.
- Because the lower initial payments repay less of the principal, higher finance charges accrue 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 you later request and qualify for any type of deferment, the federal government will pay the interest that accrues on any portion of your consolidation loan that paid off Subsidized Stafford loans. You are responsible, however, for accrued interest for the non-subsidized portion of the loan.
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 into 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 e-mail when your ScholarPoint Federal Consolidation Loan has been completed. In the mail, you will also receive a repayment schedule and disclosure statement.
When will I have to make my first payment?
Typically, your first payment is due 30 to 45 days after the consolidation has been made.
We estimate your payments by assuming a starting repayment date of 30 days after making the new consolidation loan.
Processing typically takes from four to six weeks.
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?
You may be able to change your payment plan. If that is not an option, you can consider using deferment and forbearance to temporarily suspend payments.
Who is the loan servicer?
A loan servicer handles the daily management and administration of your new loan during repayment. The servicer handles the billing, payment tracking, review of deferment requests, and maintenance of your loan. At ScholarPoint, we partner with industry-leading servicers 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.
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