Student Loan Consolidation

Do you have several federal student loans? Does keeping track of all of them add to your stress every month? A Direct Consolidation Loan might be just what you need to simplify your loan repayment. A Direct Consolidation Loan allows you to combine multiple federal education loans into one loan. This would consolidate all your monthly payments into a single payment. Consolidation can also make you eligible for additional income-driven repayment plans and forgiveness programs. Applying for a Direct Consolidation Loan is free and easy. Here, we’ll tell you what you need to know to get started.

Are your student loans eligible for consolidation?

Most federal student loans are eligible for consolidation. Parent PLUS loans taken out for a student cannot be consolidated with that student’s individual loans. Private loans are not eligible for consolidation.

When can you consolidate your loans?

Eligible loans can be consolidated when you drop below half-time status in school. That means, if you graduate, drop out, or aren’t taking enough credits for you to count as a half-time student, your loans could be eligible for consolidation.

Pros and Cons

There are several variables to consider when deciding if student loan consolidation is right for you. Some pros are:

  • Consolidation can drastically simplify loan repayment by giving you a single loan payment each month
  • Consolidation can lower your monthly payment by giving you a longer period of time to repay your loans.
  • Consolidating loans other than direct loans may give you access to additional income-driven repayment plan options and Public Service Loan Forgiveness.
  • Consolidation converts all variable-rate loans you have to a fixed interest rate.

However, there are some downsides to loan consolidation:

  • Consolidation usually increases the period of time you to have to repay your loans, which might cause you to pay more interest on the loan.
  • Consolidation may negatively affect your eligibility for certain borrower benefits that are currently associated with your loans, such as:
    • interest rate discounts
    • principal rebates
    • loan cancellation benefits
  • Credits for loan payments made toward income-driven repayment plan forgiveness or the Public Service Loan Forgiveness will be lost when the loans are consolidated.

How does consolidation affect your interest rate?

The interest rate of a consolidated loan is the weighted average of all the individual loans, rounded up to the nearest one-eighth of one percent.

How do you apply for student loan consolidation?

Applying for student loan consolidation is free and easy. You can apply online or apply by mail.

What are the requirements for loan consolidation?

Generally, loans must in good standing to be eligible for consolidation. That is, they must either be in repayment or the grace period to qualify. To consolidate defaulted loans, further requirements must be met. More information can be found here.

Direct Loan Consolidation is free and easy. Contact us today for more information and assistance with getting started.