THE RIGHT RATE REFINANCING PROGRAM FREQUENTLY ASKED QUESTIONS

Announcement: The Right Rate Refinancing Program has been discontinued.

Why?

For one simple reason: it will no longer save you more money each month. The Right Rate Refinancing Program is based on the 90 day commercial paper rate. This rate has been going up steadily since the introduction of the Right Rate Program and it is now to the point where opting for a Right Rate loan will not save you money. The current projections for the 90 day Commercial Paper Rate indicate a rate between 4% and 5% - which means that if you consolidated your student loans using the Right Rate program, you would receive essentially no discount at all, and if your goal is to save more money, then obviously the program isn't going to help you, and we're all about helping you as much as possible.

What to do instead of the Right Rate program? Reconsolidate with our Standard Benefits Package! For student loan consolidations of loans with a total balance exceeding $20,000, you will receive up to 1.25% off your interest rate. Compare and save:

Loan Balance	Current Payment	New Payment	You Save/Month	You Save/Year
$20,000	$245/month	$170/month	$75/month	$899/year
$40,000	$491/month	$315/month	$175/month	$2,103/year
$60,000	$736/month	$451/month	$285/month	$3,422/year
$80,000	$981/month	$601/month	$380/month	$4,562/year
$100,000	$1,227/month	$751/month	$475/month	$5,703/year

Examples shown use an 8.25% interest rate.

Try our calculator to see how your specific situation will look!

Apply now to reconsolidate with our Standard Benefits Package!

We are keeping the old Right Rate information here below for reference purposes only.

BENEFIT QUESTIONS:

1. Who is eligible for this benefit?

• Borrowers who currently have Federal Direct Consolidation loans.
• Borrowers who currently have FFELP consolidation loans eligible for conversion into a Direct consolidation loan. (Once the conversion to a Direct consolidation loan is complete, the loan can be reconsolidated as another FFELP loan, utilizing the RightRate benefit.)
• Borrowers who have not yet consolidated their FFELP or DIRECT student loans.

2. Who is ineligible for this benefit?

• Private loan holders.
• Borrowers currently in default.
• (All other rules regarding consolidation eligibility apply.)

3. How much will the borrower save?

The amount the borrower will save will depend on the consolidation loan balance, the consolidated fixed rate, and the loan term, as compared to the borrower’s variable interest rate over time. The chart below illustrates savings to various loan amounts, assuming the current interest rate remains in place. Actual savings can vary widely depending on the variable interest (currently at 6% until July 1).

4. Will borrowers be eligible for other borrower benefit programs while using the RightRate plan?

No, each borrower is eligible to take advantage of only one benefit plan.

5. Can the borrower switch borrower benefit programs?

In order to switch borrower benefit programs, the borrower must be eligible for a refinancing loan, and must reconsolidate under another borrower benefit program.

6. What will the borrower’s interest rate will be?

The borrower’s consolidation loan interest rate will be variable based on the quarterly Federal commercial paper rate plus 3%. However, this rate will never exceed the borrower’s weighted average consolidation rate. If the borrower loses the benefit, the loan’s rate will automatically become fixed at the original consolidation rate.

The Federal commercial paper rate is the AA Financial 90 day commercial paper rate, determined at the beginning of each quarter. For the quarter beginning 4/1/2005, the Federal commercial paper rate is 3%; the Right Rate Refinancing Rate is 6%. At this rate, the Right Rate Refinancing program will benefit you if your federal student loan consolidation fixed rate is higher than 7.25%. If your federal student loan consolidation fixed rate is lower than 7.25%, you will benefit more from our standard student loan consolidation benefits.

7. What repayment plans are available for this loan?

A RightRate borrower can choose any of the existing repayment plans available through ELSC only.

8. Is there a prepayment penalty?

There is no repayment penalty.

9. If the borrower makes late payments, will they lose this benefit?

If the borrower goes 40 days past due, the benefit is lost for the following quarter and all future quarters. Example: A borrower goes 40 days past due in February, the benefit will be lost April 1. The borrower will never again be eligible for this or any other borrower benefit.

10. How often does the interest change?

The commercial paper rate, upon which the variable interest rate is based, is reported quarterly by the Federal Reserve. If/when it does change, the borrower’s interest rate will adjust accordingly.

11. What is the interest rate cap?

The Federal consolidation loan program rate cap is 8.25%. The borrower’s cap is the weighted average of their loans rounded to the nearest 1/8%. The borrower’s interest rate will never exceed the weighted average of the individual fixed rate loans s/he is consolidating.

12. Can the borrower choose to fix the interest rate at any time?

The borrower does not ever have the option to fix the rate. The terms of the plan dictate that the borrower’s interest rate varies according to the market, never to exceed the original fixed rate.

15. If a borrower who has a RightRate loan goes into deferment or forbearance, does the loan rate go back to the fixed rate or does it remain variable? If it goes back to the fixed rate, will it go back to the variable rate after the deferment or forbearance is over?

It remains variable, resetting quarterly, even during times of forbearance or deferment.

16. So, a deferment or forbearance does not constitute an event that would cause the borrower to lose the benefit?

No, it essentially freezes the loan and the borrower is not considered delinquent.

17. Is someone who is currently in forbearance or deferment eligible for RightRate?

Yes, as long as it is not an in-school deferment.

18. Do grace rates apply to RightRate loans?

Grace rates would be handled exactly the same as they are with standard benefit loans. If the consolidation goes through during grace the borrower locks in the even lower rate as a part of the weighted average rate calculation. If a borrower has loans in grace they would probably be better off consolidating that or those loan(s) in the standard benefit and taking any older higher rate loans into a separate consolidation loan under right rate.

19. Since HEAL loans are always variable, how can they be consolidated into RightRate loans?

HEAL loans are technically not merged together with the other loans in a consolidation. They must remain separate and do continue to be variable. The billing is combined. The ability to have one bill and the extension of repayment terms are the only benefits to combining HEAL loans with other loans.

20. What if a borrower would like to participate in this program, but we think the borrower would benefit more from a traditional consolidation benefit?

Your obligation will be to provide all of the information about both benefits so that the borrower can make an informed decision. There may be borrowers who could potentially benefit from either borrower benefit program. Some may have a tough decision to make, but ultimately, the decision is up to the borrower and we may have to allow them to decide against what we may think is in their best interest.

21. Is this borrower benefit a short-term promotion or will we offer it indefinitely?

The marketing campaign for RightRate will last two to three months but the benefit will be offered indefinitely, or until consumer interest subsides.

BILLING QUESTIONS:

22. May a borrower always pay at the fixed rate and allow the difference to be applied to principal?

Yes.

23. Will the variable interest rate appear on the borrower’s monthly bill?

Yes, the term “interest rate” appears on the bill and will reflect the variable interest rate.

24. Will the borrower receive notification of rate and payment changes quarterly?

All borrowers, including those on Electronic Funds Transfer, will be notified via mail of payment and rate changes.
The Right Rate Refinancing Program Frequently Asked Questions