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What
is consolidation?
Loan consolidation allows you to
refinance any or all outstanding federal student loans
and create a single new loan with one monthly payment.
The new loan will have a fixed interest rate, new
terms, and may have an extended repayment period of
up to 30 years.
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Is consolidation
right for you?
To be
eligible for loan consolidation, you must agree to
the terms and conditions listed on the promissory
note, which include:
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You are not enrolled in school, or you are enrolled
on a less than half-time basis.
-
You are in the "grace period" or already in repayment
on all loan(s) you plan to consolidate.
-
If you are in default, you must either make satisfactory
repayment arrangements with your current lender
or agree to repay the consolidating lender under
an income-sensitive repayment plan.
-
You must agree to notify the lender of any address
changes.
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Which
loans can you consolidate?
Not all loans are eligible for
consolidation. Private loans from banks, schools or
family cannot be consolidated. Loans from the following
programs are eligible for consolidation:
-
Federal Parent Loans for Undergraduate Students
(PLUS)
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FFELP Subsidized Stafford loans
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FFELP Unsubsidized Stafford loans
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Federal Insured Student loans (FISL)
-
Federal Guaranteed Student Loans (GSL)
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Federal Supplemental Loans for Students (SLS)
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Auxiliary Loans to Assist Students (ALAS)
-
Federal Perkins Loans (formerly National Defense/Direct
Student Loans-NDSL)
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Health Professions Student Loans (HPSL)
-
Heath Education Assistance Loans (HEAL)
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Loans for Disadvantaged Students (LDS)
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Nursing Student Loan Program loans (NSLP)
-
Federal Direct loans
-
Direct Subsidized Stafford loans
-
Direct Unsubsidized Stafford loans
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Direct Subsidized Consolidation loans
-
Direct Unsubsidized Consolidation loans
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Direct Parent Loans for Undergraduate Students
(PLUS) loans
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Direct Parent Loans for Undergraduate Students
(PLUS) Consolidation loans
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How
can you apply for consolidation?
The first step is to contact your
current lender(s). If you have only one lender, you
must apply through them. If you have more than one
lender you can choose which you would like to consolidate
through. If none participate, you may apply through
any other participating lender.
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What
is student loan consolidation?
The student loan consolidation
program is for those people who have multiple loans
and want to "combine" all or some of them into one
new loan. The new consolidation loan will pay the
student loans included in the consolidation in full.
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Are
there advantages to consolidating my loans?
You will have one monthly payment
instead of several. If you are married and both you
and your spouse have student loans, the loans that
qualify can be consolidated and, as a couple, you
will have only one monthly payment. Depending on your
student loan indebtedness, you could have up to 30
years to repay your consolidated loan. You will also
have the choice of level, graduated or income sensitive
repayment plans.
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And,
the disadvantages?
If you extend the repayment period,
you will pay more interest on the new loan.
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What
about the interest rate?
The interest rate on consolidation
loans is the weighted average of the loans being consolidated
rounded up to the nearest 1/8 of 1% or 8.25%, whichever
is less.
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Will
I still be eligible for deferments?
Depending upon the loans included
in your consolidation, a deferment may be available
if you, are in school at least half-time, unemployed,
or suffer from an economic hardship. The U.S. Department
of Education will pay the interest that accrues during
an eligible deferment period on the subsidized portion
of a consolidation loan. You are responsible for the
interest that accrues during deferment on any other
loan types.
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What
if I complete the consolidation process but did not
get all of my loans included?
You will have up to 180 days after
the consolidation is complete to include eligible
loans. However, after the 180-day period, eligible
loans that were not included may not be added. New
loans obtained after you consolidate may be consolidated
in a new consolidation loan.
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Can
I consolidate defaulted loans?
The holder of the defaulted loan(s)
must certify that you have made at least three consecutive
monthly payments. Or you must agree to repay your
consolidation loan under the income sensitive repayment
plan. You must also be in a current repayment status.
Additional conditions may exist, so be sure to contact
the holder of the defaulted loan(s) before starting
the consolidation process.
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If I
decide to consolidate, how do I get an application?
Check with your current lender(s)
to see if they participate in the Federal Consolidation
Loan Program. If they do not, call
College Access Network
at 303-305-3500 or 800-727-9834 for a list
of participating lenders.
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