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Consolidation Frequently Asked Questions – FAQ's

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 lower monthly payment. You can consolidate with ScholarPoint if you have Federal Direct Student Loans or eligible loans with multiple lenders.

Why should I consolidate my student loans with ScholarPoint?

ScholarPoint offers a complete and instant online student loan experience. You simply enter your information into our easy-to-use online form, sign electronically for your promissory note and we immediately begin processing your loan.

In addition to our incredibly fast and simple process, we also offer some of the most competitive student loan interest rates and borrower benefits available. If you want to secure a low rate for the life of your student loan and reduce your monthly payments to the lowest possible payment then ScholarPoint is your only choice.

ScholarPoint communicates with its customers via email. You will receive ongoing email correspondence during your loan processing providing you with up-to-date status of your approval process and when you can expect your loan to be approved and funded. ScholarPoint customers also have a "My Account" page where you can log on anytime to check your student loan status and manage your loans.

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, our recommendation is that you tell any other lender that may call that you already have a lender and are in the process of consolidating.

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. We have a staff available to talk with you, but we wait for you to contact us and we provide you with email, chat and phone as means to communicate with us.

When can a borrower consolidate?

To qualify for a Federal Family Education Loan Program (FFELP or FFEL) Consolidation loan, the borrower must meet the following eligibility criteria* at the time he/she applies for the Consolidation loan:

There may be additional eligibility criteria. Call ScholarPoint Customer Support for details.

Also see in-school consolidation options below.

What loans are eligible for a ScholarPoint Consolidation loan?

The following is a list of loans types that are eligible for inclusion in the Federal Consolidation Loan Program:

What if I have a Perkins or Direct Loans as well as loans from a single Federal Family Education Loan Program ("FFELP") lender?

If you have some of your loans with the Direct Loan Program or Perkins and some with one FFELP lender*, then you may qualify for a process where we will move forward with consolidating your Direct loans or Perkins in one ScholarPoint loan and then use a form called the "180 Day Add-on" to roll or add your FFELP lender loans into that loan. This may seem complicated, but under current guidelines, the Direct Loan Program is not considered a private lender. What this means is that the private lender you have some of your loans with is the first lender you may be able to work with.

This process requires we fund your loan in two stages using one additional form, the 180 Day Add-on form. In the first stage we will consolidate only your Direct loans. You will receive a notice from us indicating completion of this stage. Once your Direct loans have been paid off, we automatically consolidate your remaining loans using the 180 Day Add-on form. We estimate up to six weeks for each stage in the process with no additional work on your end.

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?

What are the eligibility requirements to consolidate loans?

If you are in repayment on two or more of the eligible loans borrowed through the Federal Family Education Loan Program (FFELP) or the Federal Direct Loan Program, you are probably eligible for a ScholarPoint Federal Consolidation (click here to see a list of loan types).

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Consolidate While in School

Can I consolidate while I am still in school?

Yes you can. When you take out a loan for yourself while in school, your loan is automatically placed in an "In-School" status so that you do not have to make payments while enrolled. Typically, you would wait until you are finished with school before you consolidate. There is a six-month period after you finish school, called a grace period, before you have to make payments. While in school and in the six-month grace period, you receive a lower interest rate on Stafford loans. Also during this time, the government pays the interest you accrue on subsidized loans.

One of the reasons you will want to consolidate while in school is the current low interest rates. Interest rates will go up on July 1st! After July 1, 2006 borrowers will no longer be allowed to consolidate while they are in school. Although you will lose your six-month grace period when you consolidate your loans, you will lock in the current low interest rate on your loans. As rates increase, the lower fixed rate will save you hundreds of dollars over the life of your loan.

In order to consolidate while in school, you must first request an early conversion to repayment from your current loan holder. Then, in order to capture the lower in-school rate, request an in-school deferment on the underlying loans. Now, finish the application process with ScholarPoint for the new Consolidation loan. If you are still attending school after the ScholarPoint Consolidation loan is complete, you can place your new loan in an in-school deferment for the remainder of the time that you are enrolled and not have to make a payment (as well as having the government pay the interest you accrue on subsidized loans).

Where do I start so that I can consolidate my loans while I am still in school?

Follows these easy steps:

If I am still in school, will I have to make payments right away?

Not necessarily. If you are still in school, you can place your new Consolidation loan into an in-school deferment status (get the form here). By doing this, you will not have to make a payment until you are finished with school. Once you consolidate, there will no longer be a grace period; however locking in a lower rate could be more valuable over the life of the loan than the grace period. Additionally, during the in-school deferment, the government will still pay your subsidized loan interest.

When will my payments start? Before I consolidated, I had a grace period to look forward to.

You have options. You can begin paying right away or defer your payments. Federal regulations dictate that your grace period ends upon the funding of a Consolidation loan. If you are having difficulty making your student loan payments, ScholarPoint can offer you a way to defer payments for up to six months by putting your loan into a forbearance status. You will get the benefit of not making payments for six months. Your grace period will have ended and you will be responsible for the accrued interest during this period. If you would like to complete a forbearance form now and have us submit it for you, please click here.

What happens to my grace period when I consolidate?

You have the option of consolidating your student loans during your grace period and taking advantage of the 6/10th of a percent rate discount during your grace period. It is important to remember that when you consolidate your loan during your grace period, your loan will immediately enter repayment. In order to receive the grace period rate on your Consolidation loan you should submit your application at least 60 days before your grace period expires. You can submit it sooner, as well as entering a Grace End Date on the application and ScholarPoint will hold your application until the appropriate time.

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Electronic Signature (E-Sign)

What is Electronic Signature?

ScholarPoint’s Sign Online™ e-signature feature is a way for you, the borrower, to completely apply for a loan online. There is no paper produced for you to physically sign. 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 gives you the ability to complete every step of your loan with ScholarPoint online without additional requirements. This eliminates the need for extra paperwork, and as a result, the time to fund your loan is drastically reduced.

Is E-Signature safe and secure?

Yes. ScholarPoint has taken every precaution to ensure that your electonric signature is as secure, or more, than traditional “wet” signatures”. We follow strict industry guidelines for e-signatures and protect your signature with marketing-leading firewall technology and industry-standard SSL encryption.

Can I choose not to E-Sign my application?

Yes. You can click on the “View the Application” link on the E-Sign page, print the application and mail it to:

ScholarPoint Financial, Inc.
3252 Holiday Court, Suite 112
La Jolla, CA 92037

Please be aware that printing, signing, and mailing the application will significantly delay the processing of your loan.

How do I rescind or cancel an E-Signature?

Once you have submitted your E-Signed application we immediately begin processing. In order to cancel that processing, we require a call from you, and possibly a written notification, at least ten days prior to the funding of the loan. Because the timing of funding can be between four and six weeks from the date of your E-Signature, it is critical that a cancellation happen early in the process. Once the loan is funded (including ten days prior to funding) the loan is not reversible and cannot be cancelled.

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Interest Rates and Other Costs

How is the interest rate calculated?

Every student loan lender must use a regulated formula to determine your base consolidation rate. The interest rate determined by this federal formula is the weighted average of interest rates on the loans consolidated, rounded up to the nearest 1/8th of one percent or 8.25%, whichever is less. The interest rate is fixed for the term of the loan. Please see our calculator to run your numbers.

How does ScholarPoint calculate its published rates for federal student loans?

Consolidation Loan:

What are interest rate discounts or borrower discounts?

Often called "incentives" or "borrower benefits", discounts are earned rate decreases. At ScholarPoint, we provide a rate decrease of .50% if you apply for auto-debit payment. We also offer a rate decrease of 1.00% if you make your initial 24 continuous monthly payments on-time and maintain a current account.

How did ScholarPoint determine the possible consolidation savings displayed on the home page and in the calculators?

We had to make some assumptions. Our financial models typically assume that a borrower has loans post-1998 to consolidate and that they will obtain, at a minimum, our auto-debit benefit. We compare a standard Stafford or PLUS repayment schedule with a Consolidation loan using the Graduated payment plan. We assume that a lower monthly payment is an objective, so we quote using the Graduated payment plan so that the first term is interest only.

Once I receive the discounts, will my payment be re-calculated?

Each time your rate is reduced with one of ScholarPoint’s discounts, the amount of interest you pay each month is reduced. As a result, you pay more towards the principal of your loan – which helps you pay off the loan sooner and save thousands in interest costs. Your monthly payment would remain the same. However, you may be eligible to change your standard payment plan to a graduated plan – which would reduce your monthly payment.

Are there other costs associated with consolidation?

There are no fees or hidden costs of any kind associated with a ScholarPoint Federal Consolidation loan. There are no closing costs or prepayment penalties, and no credit checks.

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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.

I would like more information on the Income Sensitive repayment option

This repayment plan is available only after required documentation is sent to the loan repayment servicer. 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 adjusted annually. This plan may be suited for you if you are experiencing extreme financial problems and may be in danger of defaulting on your loans. You have to qualify for this plan.

Key Factors

Will I retain my interest subsidy?

You can consolidate Subsidized Stafford loans with other loans without sacrificing your eligibility for an interest subsidy. If at a later date, you request and qualify for any type of deferment, the federal government will pay the interest that accrues on the portion of your consolidation loan that repaid Subsidized Stafford loans. You would be responsible, however, for paying the interest that accrues on the remainder of the loan.

How do I opt out of getting my Notice of Disclosure online and getting a paper copy of the Notice of Disclosure mailed to me?

If you would like to receive a paper version of the disclosure statement, you can either print the version that we send you or call us and we will print and mail a copy to you.

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 in 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 mail when your ScholarPoint Federal Consolidation loan has been completed. You will receive a repayment schedule at the time of disclosure.

When will I have to make my first payment?

Typically, your first payment is due within 30 to 60 days after the consolidation has been made. We recommend and assign a repayment date 30 days from the loan being made. Processing can typically take up to eight weeks, although ScholarPoint is often able to complete the process much more quickly.

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?

If changing payment plans does not ease the burden, you still retain all of your deferment and forbearance benefits and can take advantage of those options.

Who is the loan servicer?

A loan servicer handles the daily management and administration of your student loan throughout repayment. The servicer does not own your loan, but just 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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* A FFELP lender is one that is a licensed entity within the Federal Family Education Loan Program (FFELP) and is not affiliated with the William D. Ford Direct Loan Program.