Advantages:

With the EAS Loan Consolidation Loan Program for HUCD (July 1st 2006 – June 30th 2007):

• Consolidation repayment rates may be as low as 5.625% or lower when achieving all borrower benefit discounts.

• Eliminate any future interest rate increases on variable rate student loans (which could increase to as high as 8.25%). Also note loophole when consolidating Grad PLUS*.

• Reduce your monthly student loan payments up to 50% or more.

• If you have variable rate loans, consolidate during your grace period for maximum savings.

• Reduce the cost of repaying your student loans by tens of thousands of dollars.

• Deferment and forbearance options are available.

• Savings can be used to eliminate credit card debt, increase cash savings and investments, save for a child’s education, or make retirement plan contributions.

• Increase borrowing power by reducing debt to income ratio.

• Access to professional counselors who specialize in loan consolidation, deferment, and forbearance options for health, legal and other professionals.

• No cost or fees to consolidate, no credit check, no prepayment penalties, and some consolidation loan interest are tax deductible (see a tax professional for specifics).

• Free of charge, no pressure, no obligation Personal Consolidation Diagnostic Review (PCDR).

• PCDRs are available upon request to all HUCD students and alumni. whether you consolidate with the EAS Loan Consolidation Program for HUCD or not.

*Effective July 1, 2006 the Deficit Reduction Act of 2005 extended PLUS loan eligibility to graduate and professional school students. The Higher Education Reconciliation Act of 2005 increased the interest rates on PLUS loans starting July 1, 2006, to a fixed rate of 8.5%, but left the interest rate formula on consolidation loans unchanged. In particular, it left the cap at 8.25%. With the PLUS Loan Interest Rate Loophole, you can use consolidation to reduce the interest rate on 8.5% fixed rate PLUS loans by 0.25%. A PLUS loan borrower can reduce the interest rate on a PLUS loan by 0.25% simply by consolidating it, so long as the PLUS loans are consolidated by themselves.

You don't want to include other types of loans in the consolidation loan because the weighted average will reduce the interest rate before applying the cap. Consolidating PLUS loans by themselves maximize the impact of the 8.25% cap. If all of your loans are PLUS loans, there are no reasons why you shouldn't consolidate a PLUS loan, so we recommend that all borrowers of 8.5% fixed rate PLUS loans consolidate them to reduce the interest rate.

It is most important to note and understand that the recommendation for use of this loophole is only applicable for PLUS loans being consolidated by themselves.

Many Grad PLUS programs offer rate discounts and incentives that reduce the effective Grad PLUS rate to well below the 8.25% cap. In addition, borrowers should carefully review the monthly payment requirements of separate Stafford and PLUS consolidations. Separate monthly payments for Stafford (Stafford & Perkins) and PLUS consolidations may significantly higher than a combined Stafford, Perkins and PLUS consolidation due to the prescribed maximum repayment terms. Since there are no pre-payment penalties with consolidation, it may be in the borrower’s best financial interest in terms of residency and early career cash flow (lower required monthly payments) to combine all eligible loans into a single consolidation. Your EAS – Loan Consolidation Program Personal Consolidation Counselor for HUCD will be happy to review your individual situation and options with you to assure you make an informed decision.

Parents of undergraduate students will be able to consolidate their loan soon after their PLUS loan is fully disbursed. Since in-school consolidation was repealed effective July 1, 2006, graduate and professional students, however, must wait until they graduate to consolidate. Since PLUS loans do not have a grace period, there is no reason to not consolidate PLUS loans immediately upon graduation.