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Why should I choose a reputable company to consolidate my student loans?

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.

The consolidation process is divided into multiple phases at the Department of Education:

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.

Now that you have an idea of the entire Department of Education’s consolidation process, let’s go over some of the pitfalls that you may encounter:


  1. Consolidation deactivated because the documents are not in. We have noticed that some accounts are deactivated even after sending documents over 5 times to Department of Education.
  2. Loans returned as private. There are a number of reasons why this may happen.
  3. School LVC (loan verification certificate) that states they do not participate in this program.  Loans left out of the consolidation. There are a number of reasons why this may happen.
  4. Loan amount duplicated.
  5. Loans that exist but are not found by the servicer.
  6. Loans that are transitioning from one system to another.
  7. Loans that are segregating from one servicer to another.
  8. Loans that are double paid by guarantor and Consolidation Company.
  9. Loans that are in protected status. This is really similar to private status, but there may be some cases where it differs.
  10. Loans that are underpaid by Department of Education.
  11. Loans that are overpaid by Department of Education.
  12. Extra collection fees after consolidation completed.
  13. Garnishment after loans paid.
  14. Tax offset after consolidation completed.
  15. Loans that are not eligible to consolidate under some repayment plans.
  16. Loans that are just not eligible at all.
  17. Loan summary that doesn’t match the original included loans.
  18. Collection agency still collecting on loans that are paid to guarantor.
  19. Collection agency trying to collect fees on a loan that does not exist.
  20. Loans that turned ineligible in the middle of the process.
  21. Multiple incorrect tags on the loans.
  22. Consolidation money returned months after the entire process is completed. Some people are paying on the new loan and getting notifications that all the entire process is cancelled and they have to start over again.
  23. Collection agency not removing the tax offset.


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.