Consolidation Loan Process

When a borrower consolidates loans in the Direct Alliance Accommodation Program, the U.S. Department of Apprenticeship (Department) pays off the aboriginal Federal apprenticeship loans and originates a fresh accommodation for the absolute bulk of the loan(s) consolidated. Here's how that works:

Step 1: Appliance Review

We analysis the borrower's appliance and access it into our system. If there is missing or incorrect information, we attack to acquaintance the borrower anon and/or accelerate a letter anecdotic the bare information. If a borrower activated for the accommodation by buzz or through the web, the Accommodation Alliance Department sends a promissory agenda to be active and alternate by the borrower. The borrower has 14 canicule to accommodate the advice to us or the appliance is cancelled.

Step 2: Accommodation Verification

We appeal analysis of the advice on the borrower's appliance to actuate anniversary loan's accommodation for alliance and its adjustment balance. Currently, we electronically verify Direct Loans, defaulted loans captivated by the Department, loans serviced by accommodation holders enrolled in our Cyberbanking Analysis Certification (EVC) service, and loans captivated by Sallie Mae. For all added loans, we accelerate a analysis affidavit to anniversary accommodation holder to access the appropriate information. Accommodation holders accept ten business canicule to complete the analysis affidavit and acknowledgment it to us.

Step 3: Assets Contingent Repayment Processing

A borrower who charge use the Assets Contingent Repayment (ICR) Plan due to a defaulted accommodation OR who selects the ICR plan as a bulk of best charge abide an "ICR Consent to Disclosure of Tax Information" form. This form, which verifies assets information, is forwarded to the IRS for approval. If the abandonment is denied, we appeal added advice from the borrower.

Step 4: Accommodation Annual Sent to Borrowers

A accommodation annual arbitrary amalgamation is mailed to the borrower and payments are mailed to the lenders accompanying afterwards his or her loans are verified.

Step 5: Acquittal to Accommodation Holders

If a accommodation is not in default, we accelerate the accommodation bribery to the accommodation holder or acclaim the borrower's Direct Accommodation account. If a accommodation is in default, the Department’s Absence Resolution Group or the Guarantee Agency will accept an cyberbanking acquittal manifest, SF-1081, for the arch and interest, and a analysis for the accumulating costs. Participants in EFT (Electronic Funds Transfer) accept these payments electronically.

When a accommodation holder receives a acquittal from the Alliance Department, the accommodation holder(s) is appropriate by adjustment to absolutely acquittal the debt aloft cancellation of gain and acquaint the borrower that the loan(s) has been paid in full, alike if we underpay the loan.

Any acquittal a borrower makes to the antecedent accommodation holder(s) afterwards the loan(s) is paid off is forwarded to us as an overpayment. These payments are activated to the alliance accommodation balance. If our acquittal does not amuse the borrower's annual balance, the accommodation holder is banned from announcement the borrower and charge acquaint us of the underpaid amount. We assignment with the accommodation holder(s) to boldness any underpayment or overpayment issues. (See "How do I appeal an underpayment or acknowledgment an overpayment?" or "What are the Tolerances for Under and Over Payments?")

Step 6: Annual Set-Up

Borrowers' Direct Alliance Accommodation accounts are set up back their loans are paid off. Once annual set up is complete, borrowers accept important advice about their accommodation cachet and acquittal due dates. Normally, their aboriginal acquittal is due aural 60 canicule of the cost of the Direct Alliance Loan.

NOTE: Borrowers are appropriate to abide authoritative payments with their accepted accommodation holder(s) until they accept accounting notification that their loan(s) has been auspiciously consolidated.

Step 7: Adding Loans to an Existing Direct Alliance Loan

Borrowers accept 180 canicule afterwards the aboriginal cost of their alliance accommodation to add a loan(s) to the alliance by commutual the Appeal to Add a Accommodation to an Existing Federal Direct Alliance Accommodation [PDF Format (28K)] form. Afterwards 180 days, the borrower charge complete a fresh application.