Federal Consolidation Loans
What is a Federal Consolidation Loan? Consolidation is the combining of one or more Federal education loan(s) into a new loan with a new payment, longer term, and fixed interest rate. The Federal Direct Lending Program is the only organization allowed to make Federal consolidation loans.
Loan Designed for: Parents or students with Federal student loans. You may not combine student, parent, or spousal loans together.
Interest Rate: The Federal consolidation loan has a fixed interest rate. In accordance with Federal regulations, the interest rate on your consolidation loan will be calculated using the weighted average of your current loans, rounded up to the nearest 1/8 th of 1% never to exceed 8.25%.
Repayment Term: The repayment of a Federal consolidation loan begins within sixty days after loan(s) are consolidated. There is no grace period; borrowers in the original six or nine month grace period forfeit the remainder of said grace period when a consolidation disbursement is made.
| Consolidated Amount | Years to Repay |
|---|---|
| $7,500 - $9,999 | 12 Years |
| $10,000 - $19,999 | 15 Years |
| $20,000 - $39,999 | 20 Years |
| $40,000 - $59,999 | 25 years |
| Over $60,000 | 30 Years |
Any fees? No. Fees cannot be charged for consolidating Federal student loan(s).
Any Drawbacks to Consolidation? Yes. By extending your loan term you will pay more interest. Additionally, by consolidating you may disqualify yourself from loan forgiveness programs like the Public Loan Forgiveness Program.
Having trouble locating all of your Student Loans? You can access all of your Federal loan history information at www.nslds.ed.gov.
How do you secure a Federal consolidation loan? To find out more about consolidation or apply for a consolidation loan through the Federal Direct Lending program, visit www.loanconsolidation.ed.gov
How do you Save on a Federal Consolidation Loan? By setting up automatic monthly payments with the Federal Direct Lending Program you can reduce your interest rate by -.25%.
Federal Loan Forgiveness, Cancellation, and Repayment Options: Depending on your career choices or type of employer, you may be eligible to participate in the Federal Student Loan Forgiveness Programs. By fulfilling certain criteria the government will "forgive" some of your Federal Stafford, Perkins, Health Professional , and/or PLUS loan debt. There are several different programs to help with loan forgiveness, cancellation or payment reduction. Read about them at the links below and learn how you may be able to take advantage of these Programs.
