Loan Consolidation Information

With interest rates expected to rise for the upcoming academic year, a major rush of in-school consolidation is expected between now and July 1. This means that you may be faced with loan consolidation telemarketers and direct mail. Below is some important tips and advice about dealing with loan consolidation telemarketing.

• Borrowers should ask for the name of the lender for the consolidation loan. Borrowers should be wary about entering into a loan consolidation arrangement with non-reputable lenders or marketing companies. Borrowers should ask if the telemarketer is working as a broker for a lender. Many telemarketing brokers are paid on a commission basis, which can encourage aggressive telemarketing tactics.

• Understand that the telemarketer could easily be wasting borrowers’ valuable time where the borrower has all of their Stafford or PLUS loans with a single lender, other than the marketing lender. In such cases, under current federal rules, only the single lender can consolidate their loans. (If borrowers whose loans are held by a single lender wish to consolidate, they should call the lender who owns their Stafford or PLUS loans.

• Borrowers have the right to ask why the telemarketer is calling and how the telemarketer got their name. In certain cases, the telemarketers call may be in violation of applicable “do-not-call” or other laws.

• Keep in mind that many consolidation telemarketers are paid to sell consolidation loans on behalf of their lender clients. These telemarketers are not being paid to make sure that borrowers select the repayment option that best suits their financial needs.