Private Loan Consolidation
Guiding Students through Repaying their Private Loans
Presented by:
Jane Lemke: AVP, Account Executive, Wells Fargo Education Financial Services Concepta Williamson: Account Executive, Charter One Bank
Agenda
Let’s Start the Discussion: Audience Questions Private Student Loans Past & Present
What is a Private Consolidation Student Loan?
The Benefits of Private Student Loan Consolidation What Borrowers Should Know
Should You Consolidate? Guidance for Families
Beyond the Financial Aid Office Discussion
What questions about consolidation/refinancing
has your office received from students and families?
How is your office currently counseling students
in the area of refinancing/consolidating private student loans?
What information are your sharing? Other questions
Question: Why can’t a lender just adjust a
student’s private loan payment to make it easier for students to pay their private loans when they run into difficulty?
Bank regulations ensure that banks are
providing product that help families succeed
Rigorous Underwriting
TransUnion Study:
Private Loans 2007-2012, delinquencies
declined from 6% in 2009 to 5.33% in 2012
Federal Student Loan delinquencies though
increased from 9% in 2009 to 12.31% in 2012.
New, credit-based loan, to pay off multiple
private education loans – refinance
Subject to private credit laws, truth-in-lending
rule and HEOA Disclosures
Payoff multiple loans and establish one monthly
payment with new loan
Reduce monthly payment
Extending the term to repay your loan Shorten the time to pay back your loan Release cosigners on existing loans
Reduce current interest rate Select fixed interest rate
The Benefits of
Borrowers should establish a clear understanding
of benefits and disadvantages
When can I complete my Private Loan
Consolidation
What are the credit and eligibility
requirements
Cosigner requirements Pricing and fees
Interest Rates – Fixed and Variable options
Minimum and Maximum loan amounts Repayment Terms and Options
Borrower benefit programs
ACH
Cosigner release
Discounts (Upfront or during
Repayment)
Prepayment Penalty
Consolidating Federal Loans with Private Loans What happens if I return to school?
What happens if “Life happens” and I run into trouble
making my payments?
Death and Disability Benefit
Reminder:
Private Loan Consolidation is not a way to get current if the borrower is behind on payments.
What to Consider about
Qualify in today’s credit environment Takes longer to pay off
Higher overall loan cost
Potential for higher interest rate*
*The lender may determine the Private Loan
Consolidation is more costly than the borrower’s
multiple loans, and the lender may determine it is in the borrower’s best interest NOT to consolidate their loans.
Should You Consolidate/Refinance
Private Student Loan(s)
Application completed identifying all loans
New loan, new rate based on current credit
Paying off the underlying loans must occur
New loan is final
Application Process for Consolidating/Refinancing
Private Student Loans
Private Loan Consolidation calculators
Consolidation Lender Lists – Examples include:
ELM or FASTChoice
Exit Counseling
Alumni Offices Career Services
Campus Human Resources
What questions about Private Student Loan
consolidation/refinancing has your office received from students and families?
How is your office currently counseling students in
the area of refinancing/consolidating private student loans?
What information are your sharing?
When are you sharing information with borrowers? Other questions
http://www.americanbanker.com/bankthink/why- banks-shouldnt-write-off-the-student-loan-market-1065302-1.html
http://www.finaid.org/loans/20120305repayingloans10 1.ppt
Thank you for your time today
Concepta Williamson, Account Executive, Charter One Bank Email: [email protected]
Jane Lemke, Account Executive, Wells Fargo Education Financial Services