Federal Student Aid - IFAP
   
HELPFUL HINTS ON CONSOLIDATION

- To speed the processing of their application, borrowers may wish
to enclose with their application the most recent statement from
their loan holder for each loan they intend to consolidate.

- Borrowers who are no longer in school but have yet to begin
repayment should wait until the last month of their grace period to
apply for loan consolidation. Repayment on consolidation loans
begins within 60 days of the first disbursement and, thus, could cut
short the grace period of a borrower who applied too early.

- The Department of Education is experiencing delays in
consolidating some loans because of loan holders' failure to deposit
payoff checks and post payments to student accounts. Borrowers in
repayment should continue to make payments until their current
loan holder notifies them that the loan has been paid in full. This
notification means the borrower is no longer liable for interest
charged by the previous loan holder.

- Married couples should weigh carefully the decision to combine
their loans into one joint consolidation loan. If one spouse dies or
becomes permanently disabled, the other spouse is still responsible
for payment of the entire consolidation loan. When a single
borrower dies or becomes permanently disabled, the consolidation
loan is discharged. Thus, each spouse may want to consolidate his
or her loans separately to minimize risk.

- By September, the application and promissory note will be
available as separate documents. Borrowers will then sign a
promissory note that reflects the total they are agreeing to repay.

- When a subsidized loan is consolidated, the interest subsidy is
usually retained. However, subsidized health professions loans will
lose the interest subsidy if consolidated.

6/10/96