Consolidation is quite straightforward: it replaces your old loans with a new one. You can consolidate just some or all of your loans.

After consolidation, your old loans are considered paid off, and you start repaying a new loan, ideally with better terms.

For AidVantage loans, you have two consolidation options: federal and private. Federal consolidation is done through the Department of Education, while private consolidation, often called refinancing, is through a private lender. These two options have major differences, so it’s crucial to choose wisely. Once you consolidate, you can’t reverse the process, so any decision you make is final.

Sherpa Note: This article originally covered Navient student loan consolidation. When Navient changed its name to AidVantage, this article was updated to reflect the new name.

Federal Direct Consolidation

The main benefit of federal loan consolidation is that you keep all the federal loan benefits, such as income-driven repayment plans and student loan forgiveness. Plus, anyone can consolidate their federal loans without needing to meet credit or income criteria.

The downside is that consolidating your federal loans doesn’t lower your interest rate. It just groups your loans. The goal behind a federal consolidation is to gain eligibility for preferred federal programs.

The danger is that federal loan consolidation might not be the best move for everyone. Mixing certain federal loans could disqualify you from the best repayment options. It’s important to weigh the advantages and disadvantages before proceeding.

Finally, you can only consolidate federal student loans into a federal loan consolidation. If you hope to convert your private loans into federal loans to get on IBR or qualify for student loan forgiveness, you are out of luck. Absent an act of Congress, this financial move is not possible.

Private Consolidation aka Student Loan Refinancing

When you explore the market for refinancing lenders, you’ll find many lenders advertising lower interest rates. Lowering your interest rates can reduce your monthly payments and help you pay off your loan sooner.

All types of loans, including federal ones, can be refinanced into private loans. However, if you’re considering refinancing your federal loans into a private loan, be cautious. While refinancing at lower interest rates can save you money, you’ll lose the benefits that come with federal loans, which is an important factor to consider.

If you decide to refinance, you’ll need a good credit score and a stable income. Since requirements and offers vary by lender, it’s wise to compare options from different companies.

	Splash is extremely focused on interest rates. They consistently have the lowest rates in numerous loan categories. Read more...
	ELFI is a traditional bank with a major focus on quality customer service. Getting approved is hard for some borrowers, but those that do get approved receive excellent interest rates. Read more...
	SoFi is the biggest name in the student loan refinance space. They consistently offer excellent rates with high approval numbers. Read more...
	Earnest attempts to look at the big picture for borrowers. The application requires a bit more information, but it doesn't take long to complete, and could result in an approval where other lenders might reject. Read more...
	LendKey partners with smaller banks and credit unions across the country. This approach results in higher approval numbers and competitive loan terms. Read more...

One thing many people forget about credit scores is that shopping around doesn’t hurt your credit score. As a result, it pays to apply at several places to find the best rate.

How To Start the Consolidation Process on AidVantage Loans

Given the enormous differences between private refinancing and federal consolidation, it shouldn’t be much of a surprise that starting each process is dramatically different.

Because the process is identical regardless of loan servicer, AidVantage borrowers will have the same consolidation process as MOHELA, Nelnet, and others. Additionally, AidVantage has no ability or authority to stand in the way of either process.

Federal Direct Consolidation – The Department of Education handles all federal student loan consolidation requests. Borrowers can start the consolidation by applying through this portal from the Department of Education. Completing the application usually takes less than half an hour. However, the full process takes several weeks or even months before the Department of Education finalizes everything.

Refinancing with a Private Lender – To refinance with a private lender, a borrower must pass a credit check to get approved. I usually recommend shopping around to get the lowest interest rate. This adds a bit of extra time to the process but can result in significant savings. Our student loan refinance company list has links to the various lender application forms. The entire private refinance process can be done in as little as a week from start to finish.

Consolidating AidVantage Loans

Just because you can’t pay off your AidVantage loan tomorrow or next week doesn’t mean you are stuck with the same loan and the same terms for years to come. Student loan consolidation offers ways to get lower payments, lower interest rates, change servicers, and pay off your loan faster.

The post How to Consolidate AidVantage Student Loans appeared first on The Student Loan Sherpa.

Predictably, hold times at Mohela, Nelnet, and other services have been long. Many borrowers are reporting waits of multiple hours.

The big disappointment has been the mistakes and bad guidance that some borrowers have received. The Department of Education makes it clear that borrowers shouldn’t have to pay for help to manage their student loans, but the companies tasked with helping borrowers haven’t done their job.

What went wrong?

Can it be fixed?

And who is to blame?

Mohela, Nelnet, Aidvantage, and Edfinancial All Deserve Some Blame

In the winter of 2020, the servicer trade organization warned that they would receive more calls in the first month of repayment than what they normally receive in a year.

Making matters worse, these companies all cut staff during the pandemic.

However, they had plenty of notice on the restart date. Even though the date had been a moving target, this time around, there was legislation spelling out when the restart would happen.

To help servicers, the Department of Education started charging interest an entire month before payments were due. This move should have spread out demand for assistance over the course of a couple of months.

Sadly, servicers were still not ready. Long hold times are a clear sign that staffing levels are too low. The processing mistakes and inaccurate guidance indicate that the staff wasn’t properly trained.

Congress Dropped the Ball

Our student loan system is frustratingly complicated at times. Between Perkins Loans, FFEL Loans, Parent PLUS Loans, Spousal Loans, and Direct Loans, we have a long list of loan types, each with different eligibility rules.

Further complicating things is the long list of repayment plans. Each new repayment plan has helped make things more affordable for borrowers, but each weighs down the system. More options mean more complications.

Congress could create one repayment plan and make all loans eligible. Congress could automate the entire process. Congress could offer debt relief. Instead, Congress hasn’t made any comprehensive reforms in years, and borrowers are stuck in this mess.

The Department of Education’s Big Mistake

Over the past few years, the Department of Education has made numerous efforts to help borrowers and correct past issues. For example, the Limited Waiver on PSLF was created to help borrowers who received inaccurate guidance about the Public Service Loan Forgiveness Program.

Unfortunately, the Department of Education repeatedly makes the same fundamental servicer error.

Contracts with loan servicers specify minimum standards of performance. There is almost no incentive for Mohela, Nelnet, or Aidvantage to innovate or improve things. The less money they spend meeting that minimum standard, the more profit they generate.

A Simple Fix to Servicing Nightmares

There should be more servicers to choose from, and borrowers should be able to pick their servicers.

Currently, borrowers are assigned to a servicer and have almost no control over who services their loans.

If borrowers could move to a different servicer, servicers would have an incentive to keep hold times low and to be helpful. Servicers would have to compete to keep borrowers on their books. Servicers would have an incentive to innovate and to provide excellent service.

This change wouldn’t be very expensive, but it could dramatically change the quality of service that borrowers receive.

Two Parties Who Don’t Deserve Any Blame: Borrowers and Customer Service Representatives

I’m intentionally putting borrowers and low-level servicer employees in the same bucket.

Both groups are victims of the same broken system.

From the borrower’s perspective, the hours-long hold times are a recipe for anger and frustration. By the time they talk to an actual human being, they get rushed and, at times, get inaccurate information. It becomes a challenge to keep your composure.

From the customer service representative’s perspective, things are likewise ugly. All day long, you are tasked with helping angry and frustrated borrowers. They ask questions you haven’t been trained to answer and blame you for things you have no control over. Worse yet, it never stops. There is one angry caller after another.

In many ways, we have been pitted against each other.

My advice to both groups is simple. Your anger and frustration are justified, but please direct it to the parties who actually deserve the blame.

The post Who is to Blame for the Servicing Mess at Mohela, Nelnet, and Others? appeared first on The Student Loan Sherpa.

Before jumping into the details and the strategy, it is essential to remember that refinancing and consolidation are very different processes. Each choice has distinct pros and cons. Additionally, because its nearly impossible to undo a consolidation or refinance, borrowers need to use extreme caution when making any decisions.

However, if your strategy is sound, refinancing and consolidation can make a huge difference in your plan to eliminate your Aidvantage student loans.

A Quick Note from the Sherpa: Although consolidation and refinancing are very different, I chose to include both in this article.

I made this decision because many borrowers, and some student loan companies, often use the terms interchangeably. While there are some similarities, borrowers must understand the differences.

Benefits of Consolidation of Aidvantage Student Loans

Consolidation is a process available to federal student loan borrowers. When you consolidate, your old federal loans are eliminated and replaced with a new federal consolidated loan.

The biggest advantage of consolidation is that it can help your loans gain eligibility for certain repayment plans and forgiveness programs. For example, if you have FFEL student loans, you can consolidate them into a federal direct loan. This consolidation allows borrowers to qualify for repayment plans like REPAYE. Parent PLUS loan borrowers can use consolidation to qualify for Public Service Loan Forgiveness.

Consolidation also helps borrowers who are in default. Consolidation is often the fastest path out of default.

Another advantage to federal direct consolidation is that it helps organize repayment. Instead of sending checks to multiple federal servicers each month, borrowers have one consolidation loan and one servicer.

A final perk of consolidation is that borrowers get to pick their new servicer when they consolidate. This is one of the only times that borrowers get to choose their federal loan servicer.

PSLF Limited Waiver Opportunity: Until October 31, 2022, consolidating comes with a few extra perks.

Borrowers can consolidate their FFEL or Perkins loans and count previous payments towards the ten years required for PSLF.

If you have previously been told that your federal loans or your repayment plan were not eligible for PSLF, be sure to investigate the limited waiver on PSLF.

How to Consolidate Aidvantage Student Loans

Applying for consolidation is relatively simple, and the Department of Education estimates that it takes less than 30 minutes to complete the request form.

While there is a physical form available, the fastest way to consolidate is to apply online at studentaid.gov.

The whole process can take several weeks or even months. However, borrowers are not required to take any action during this time.

When your consolidation application is submitted, the loan servicers work to create the new consolidation loan and pay off the current loans. Once terms have been finalized, borrowers should receive a letter detailing the consolidation. This is also the borrower’s last chance to stop the consolidation from going through and becoming permanent.

Are you consolidating the right loans? In some cases, the best consolidation strategy is only to include certain loans.

If you are unsure about your consolidation plan, check out the complete guide to federal direct consolidation. It includes the pros and cons as well as some common mistakes to avoid.

The Big Difference Between Consolidation and Refinancing

In a student loan consolidation, your old federal loans are paid off and replaced with a new federal loan. Consolidation is only available for federal student loans.

In a student loan refinance, your old loans are paid off and replaced with a new private loan. Borrowers can refinance federal and private loans.

Thus, even though the process is somewhat similar, the results are very different.

The Big Refinance Risk: Refinancing makes it easy to turn a federal loan into a private loan. Unfortuantely, most borrowers are unable to turn private loans into federal loans.

If you refinance federal loans, you give up important federal perks like income-driven repayment and student loan forgiveness.

The Benefits of Refinancing Aidvantage Student Loans

During the federal payment and interest freeze, refinancing probably isn’t worth it because private lenders can’t compete with the 0% interest rate offered by the federal government. Once repayment and interest restart, refinancing may make sense for some borrowers.

The biggest advantage to refinancing student loans is getting a lower interest rate.

Congress sets federal student loan interest rates. Borrowers pay interest based on the federal loan type and when they borrowed the loan. Borrowers with a steady job and solid income receive the same interest rates as borrowers that creditors consider high risk.

If you have a solid credit score and income, refinancing often means lowered interest rates. Spending less on interest means eliminating debt faster.

Lower monthly payments are another perk to refinancing for some borrowers. In some instances, refinancing to a 20-year loan saves money on interest and offers lower monthly payments.

Finally, if you are unhappy with Aidvantage, refinancing means you no longer have to work with them. This is a long list of refinance lenders to choose from.

How to Refinance Aidvantage Student Loans

To refinance your Aidvantage loans, you need to find a willing private lender.

In most cases, shopping around is the best approach. Checking rates with multiple lenders increases your approval odds and helps you find the lowest interest rate possible.

Once your refinance loan is approved, the refinance lender takes care of the heavy lifting. The refi lender will pay off your existing loans and set up your new refinance loan. Lenders and loan servicers like Aidvantage cannot prevent borrowers from refinancing their loans.

For the borrowers looking for the lowest interest rate possible, the following lenders advertise the best interest rates, as of November, 2024:

Rank	Lender	Lowest Rate	Sherpa Review
T-1		4.86%	ELFI Review
T-1		4.86%*	Splash Financial Review
3		5.29%	Laurel Road Review

If you are looking for a lower rate and a lower monthly payment, a 20-year, fixed-rate loan is often the best choice. The following lenders advertise the best rates:

Rank	Lender	Lowest Rate	Sherpa Review
1		6.08%*	Splash Financial Review
2		6.53%	ELFI Review
3		6.55%	Laurel Road Review

The post How to Consolidate or Refinance Aidvantage Student Loans appeared first on The Student Loan Sherpa.

What does all this movement mean for borrowers?

Regulators claim that the move is in the best interest of borrowers. However, the exact benefits are murky at best.

We do know that hundreds of Navient employees are becoming Maximus employees. It isn’t clear how a new corporate entity signing their checks will mean a better experience for borrowers.

The Creation of Navient

In 2013, student loan giant Sallie Mae split into two different companies: Sallie Mae and Navient. Sallie Mae tasked Navient with handling federal student loan servicing.

At the time, Sallie Mae faced significant regulatory pressures, and many consumer advocates criticized Sallie Mae for providing lousy advice to borrowers and failing as a servicer.

Borrowers were told that Navient’s split from Sallie Mae might actually be a good thing. Why? Because the Department of Education contracts were “very specific in what companies like Navient can and can’t do for borrowers.”

Instead, Navient repeatedly faced controversy, investigations, and lawsuits.

Navient’s Checkered Past – A Timeline of Failing Borrowers

Same People, Different Name

Aidvantage is supposedly different and better for borrowers.

Once again, we are told that the contract terms mean borrowers will get better servicing.

Borrowers who were around for the 2014 transition know that “strict” contract terms don’t necessarily mean better servicing.

Maybe this time will be different. Maybe the new contract terms are actually better for borrowers.

I’m not holding my breath.

The fact that hundreds of Navient employees are now Maximus/Aidvantage employees scares me. The name on the building couldn’t matter less. The guidance borrowers receive is what matters.

If the same people provide the same short-sided help for borrowers, nothing will improve.

Tips for Borrowers Stuck with Navient/Maximus/Aidvantage

New servicers are almost always an issue for borrowers. In some cases, it is a minor inconvenience. In others, the servicer transition causes major problems like missed payments and adverse credit reporting.

Sadly, borrowers don’t have the right to prevent a servicer transfer. Worse yet, borrowers have limited options for picking a new servicer.

There are several things Naivent borrowers can do right now to avoid major issues with the transition:

The post Navient’s Strange History and Student Loan Exit is a Warning to Borrowers appeared first on The Student Loan Sherpa.