Loan consolidation
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Lower your payments through consolidation
The Federal Consolidation Loan Program lets you combine multiple federal student loans into a single new loan. So instead of making several different student loan payments, you make one monthly payment for all your federal student loans.
Consolidation may lower your monthly payments and extend your repayment term.
Due to the Health Care and Education Reconciliation Act of 2010 (HR 4872), FFEL Program lenders are no longer offering consolidations. Contact your lender to find out what plan is best for you. If you don’t know who your lender is, go to the National Student Loan Data System (NSLDS), which is the central database for all federal student loan information. If you have FFEL Program loans you may be able to consolidate in the Direct Loan Program.
For more information, contact the U.S. Department of Education at www.loanconsolidation.ed.gov.
Here are some of the details about the Federal Consolidation Loan Program:
Loans that qualify for consolidation
Almost all federal loans qualify for consolidation. Some of the more common include:
- Stafford loans in the FFEL and Direct Loan Programs, both subsidized and unsubsidized
- PLUS loans in the FFEL and and Direct Loan Programs
- Consolidation loans in the FFEL and Direct Loan Programs
- Perkins loans
- Health Professions Student Loan (HPSL), including Loan for Disadvantaged Students (LDS)
- Nursing Student Loan (NSL)
- Health Education Assistance Loan (HEAL)
- Guaranteed Student Loans (GSL)
- Supplemental Loans for Students (SLS)
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How long you have to pay back your consolidated loans
Loan terms vary based on the amount you finance. Remember, even if your loan amount qualifies for an extended loan term, paying off your loans earlier can save a lot in interest payments.
| Total federal student loan indebtedness | Maximum term |
|---|---|
| $0 – $7,499 | 10 years |
| $7,500 – $9,999 | 12 years |
| $10,000 – $19,999 | 15 years |
| $20,000 – $39,999 | 20 years |
| $40,000 – $59,999 | 25 years |
| $60,000 or greater | 30 years |
Grace periods and consolidation loans
Consolidation loans do not have 6- or 9-month grace periods the way other loans do—you must begin repayment on a consolidation loan within 60 days of disbursement, regardless of whether the grace periods on the individual loans have ended. This is because once you consolidate your loans into one, you forfeit the specific benefits of the individual loans.
The question you will have to consider if you choose to consolidate is when to do it—before or after the grace periods on your individual loans end. Waiting to consolidate until after that 6- to 9-month grace period allows you to delay repayment, which could be advantageous in your situation.
However, the reason to consolidate sooner would be to lock into a lower, fixed interest rate on your consolidation loan before the variable interest rates on any of your individual loans start to rise. In that case, consolidating early could help you save money in the long run. Talk to your lender about when it would be best for you to consolidate, if at all.
Back to topRepayment options for consolidated loans
Consolidated loans feature the same repayment options as other federal loans, ranging between standard repayment, extended repayment, graduated repayment, income-sensitive, income-contingent, or income-based repayment plans. The repayment period will last 10 to 30 years depending on your student loan debt and the plan you’ve chosen.
For more information, visit our Repayment options section.
Back to topThings to consider before consolidating
The consolidation program has limitations you should know about before you apply:
- You cannot combine your loans with your spouse’s loans
- You cannot consolidate while you are in the middle of your education program
- You must wait until you have stopped or completed your program
- You must have at least one eligible federal student loan to consolidate
- You cannot combine private and federal loans
- You may have too low of a loan balance
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Disadvantages to consolidating your loans
Consolidation can be a good repayment option, but it’s not for everyone. Not only could your repayment period become longer, you will also forfeit individual loan benefits.
Consolidation presents unique disadvantages for Perkins loan borrowers because it replaces the longer grace periods and cancellation benefits of Perkins loans with the standard federal loan terms.
Here are some disadvantages to consolidating your loans:
- Your repayment period could stretch up to 30 years, which means more interest would accrue over the life of the loan
- The overall cost of repaying your consolidation loans could be the same as, if not higher than, the cost of repaying your unconsolidated loans
- Once you consolidate your loans into one, the individual loans cease to exist, so you cannot revoke the consolidation for any reason
Talk to your loan holder. They can help you consider the pros and cons of consolidating your loans.
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