What kinds of loans can be Consolidated?

All the loans discussed in this publication are eligible for consolidation, and others can be included. To get a complete list, contact your lender for a FFEL Consolidation Loan. For a Direct Consolidation Loan, contact the Loan Origination Center’s Consolidation Department at 1-800-557-7392.

When can I consolidat?
You can get a FFEL or a Direct Consolidation Loan during your grace period, once you’ve entered repayment, or during periods of deferment or forbearance. PLUS Loans are eligible for consolidation once they are fully disbursed.
You can also get a Direct Consolidation Loan (but not a FFEL Consolidation Loan) while you’re in school. You must be attending at least half time and have at least one Direct Loan or FFEL in an “in-school period.” (Generally, your loan is in an in-school period if you have been continuously enrolled at least half time since the loan was disbursed.) If the school you’re attending does not participate in the Direct Loan Program, at least one of the loans you consolidate must be a Direct Loan.
If you want to consolidate during your grace period and you have a Direct Loan, you’ll still keep your grace period after you leave school. If you have a FFEL, you won’t keep your grace period, so it’s best to consolidate near the end of the grace period to keep as much of it as possible.

How can I get a Consolidation Loan?
For a FFEL Consolidation Loan, you (and your parents, if they want a FFEL PLUS Consolidation Loan) can contact the consolidation department of a participating lender for an application and more information. If the same loan holder holds all the loans you want to consolidate, you must obtain your consolidation loan from that holder, unless you haven’t been able to get a loan with income-sensitive repayment terms acceptable to you.
For a Direct Consolidation Loan, you (and your parents, for a Direct PLUS Consolidation Loan) can contact the Direct Loan Origination Center’s Consolidation Department at the phone number and Web site previously given. To get a Direct Consolidation Loan, you must consolidate at least one Direct Loan or FFEL. (For example, if you had only Federal Perkins Loans, you could not get a Direct Consolidation Loan.) If you don’t have a Direct Loan, but you have a FFEL, you must first contact a FFEL lender to ask about getting a FFEL Consolidation Loan. If you can’t get one, or you can’t get one with income-sensitive repayment terms acceptable to you—and you’re eligible for the Direct Loan Income Contingent Repayment Plan—you can get a Direct Consolidation Loan.
If your parents want to apply for a FFEL PLUS Consolidation Loan, no credit checks are required. If they want to apply for a Direct PLUS Consolidation Loan, they are subject to a check for adverse credit history.
If you’re in default on a federal student loan, you still might be able to consolidate, provided the defaulted loan is not subject to a judgment or wage garnishment.
You’ll be given more information about consolidation loans during entrance and exit counseling sessions. You can also click here for more information from our Web site.

How do I pay back a Consolidation Loan?
Almost all the FFEL and Direct Loan repayment plans are available to FFEL and Direct Consolidation Loan borrowers, except that Direct PLUS Consolidation Loans can’t be repaid under the Income Contingent Repayment Plan.
The payback term can range from 10 to 30 years, depending on the amount of debt being repaid and the repayment plan you select. Education loans not included in the consolidation loan are considered in determining the maximum payback period. You can repay your loans under a shorter period than the maximum allowed.
What’s the interest rate on a Consolidation Loan?
The interest rate for both Direct and FFEL Consolidation Loans is a fixed rate for the life of the loan (unlike Direct and FFEL Stafford Loans, which have a variable interest rate). So, once you consolidate, your rate won’t change, regardless of what future rates might be. The fixed rate is based on the weighted average of the interest rates on the loans you consolidate, rounded up to the nearest one-eighth of a percent. The interest rate does not exceed 8.25 percent.

Are there any disadvantages to getting a Consolidation Loan?
Yes, there could be. Consolidation significantly increases the total cost of repaying your loans. Because you can have a longer period of time to repay, you’ll make more payments and pay more interest. In fact, consolidation can double total interest expense. So, compare the cost of repaying your unconsolidated loans with the cost of repaying a consolidation loan.
Consider whether you lose any borrower benefits if you consolidate, such as interest rate discounts or principal rebates—these can significantly reduce the cost of repaying your loans. Also, you might lose some discharge (cancellation) benefits if you include a Federal Perkins Loan.
Once made, consolidation loans can’t be unmade because the loans that were consolidated have been paid off and no longer exist. Take the time to study your consolidation options carefully before you apply, and talk to the holder of your loans for more information before you consolidate.