We want to take the time today to go over the different pitfalls that you can encounter when consolidating you student loans on your own, but first we have to start explaining the consolidation process for those that really don’t know where it starts.
“A federal student loan consolidation is the process of grouping all of your student loans into one single account with one single and lower monthly payment”.
Notice that in the definition we stated one “account” instead of one “loan”. There is a misconception that you will have only one loan because that is the definition of consolidation. The reality is that some loan types will be merged together but others won’t. For instance, Subsidized loans and Unsubsidized loans will not be grouped together on the same loan. Therefore, if you consolidate your student loans you may have multiple loans, but you will have one account with one payment.
Step 1) Pre-application: the application was received by the Department of Education but it is still in review.
Step 2) Certification: the Department of Education has mailed the loan verification certificates to your current lenders.
Step 3) Summary: the loan verification certificates are in and the account is scheduled to be paid.
Step 4) Funding: the loans are paid and the account is getting ready to be booked.
Step 5) Booked: loans are confirmed paid and the consolidation is partially completed (assuming everything is 100% accurate).
Deactivated: there is a problem with the consolidation that needs resolution.
Complementary status: the account is on hold usually because of something related to the loan status.
There are many other pitfalls that we can describe but we just wanted to cover a few. One of the main reasons you should choose a reputable company, is because they have the experience fixing and preventing all these pitfalls. There is a solution for most of them, but in some cases, it take hours of research and phone calls.
When consolidating your student loans we advise you to use a professional service, especially if you are in default status or about to go into wage garnishment. For more information contact us at 866-319-2101.