The information provided in this bulletin echoes that in GEN letter 00-07. The first payment due date is within 60 days after the date of the first disbursement. Borrowers who apply during their grace period do not receive an additional 6-month grace period. Borrowers who consolidate during their grace period may receive a lower interest rate on their underlying loans - depending on the type of loans being consolidated. This is the only circumstance in which a borrower can consolidate AND be assured of receiving a 6-month grace period.
Borrowers have an expanded time period during their grace period to apply for a consolidation.
Previously, it was recommended that borrowers in their grace period apply for a consolidation during the 3rd or 4th month of their grace period. Therefore, a borrower could apply for consolidation on the last day of their grace period and, as long as their application is postmarked before their grace period expired, they would receive the interest rate benefit. With the July 1 interest rate increase fast approaching, many borrowers may be faced with a choice of either keeping the remaining portion of their grace period OR locking in the lower interest rates. While each borrower needs to make their own decision, they should weigh the long term interest savings versus the short term benefits of a grace period. If You Need Assistance Please contact the loan consolidation office at the Loan Origination Center at the following email address and phone numbers if you have any questions on the Direct Consolidation Loan Program.