In May 2005, the U. S. Department of Education clarified early loan consolidation as an option for students who are still in school. The advantage of early loan consolidation is a lower interest rate for the student’s consolidation loan, since the interest rate is expected to rise on July 1, 2005. Over the life of the loan repayment, this can save the student a considerable amount in interest repaid.

One disadvantage of early loan consolidation is the student forfeits the grace period which normally allows the student a few months after graduating or leaving school before beginning loan repayment. On the positive side, students can contact their lender and ask to be given an in-school deferment on the consolidation loan while they are still attending school. This allows the student to receive the lower interest rate and to not have to begin repayment until the student has graduated or dropped below 6 hours in enrollment.

To take advantage of early loan consolidation and in-school deferment, you must contact your lender and ask for it. Contact information for ETSU’s most frequent student lenders can be found below.

Attention Continuing Students

You can consolidate your loans before you graduate if you are willing to place your loans into repayment status now and get an in school deferment so you will not have to make principle repayment. Get smart about your loan debt and lock in a fixed interest rate!

Consolidation Pros

• Lock in a low fixed interest rate
• Reduce monthly payments with extended repayment period
• Make just one payment to one lender/servicer each month
• No charge to consolidate
• No prepayment penalty
• In-school deferment

Consolidation Cons

• Prolong the life of your loan
• Forfeit original repayment incentives
• Possible elimination of deferment options
• Potential loss of grace period
• Possibly pay more total interest over extended repayment period
• Assume additional liability under spousal consolidation - both spouses are equally and severally liable regardless of marital status