Federal Consolidation Loan FAQs

What is federal student loan consolidation?

Should I consolidate?

How much can I lower my monthly loan payment?

Consolidation loan advantages

Consolidation loan disadvantages

Loans eligible to be included in consolidation

Can an old consolidation loan be included in a new consolidation?

How to pick a consolidation lender

Compare borrower benefits

Can loans in school status be included in consolidation

What repayment terms are available for a consolidation loan?

Contact your current lender and other links

What is federal student loan consolidation?

A Federal Consolidation Loan combines several types of eligible federal student or parent loans into one bigger new loan from a single lender, which is then used to pay off the balances on the other loans. The result is one loan with a lower monthly payment. The consolidation loan interest rate is a weighted average of the rates of the federal student loans that you consolidate, rounded up to the nearest 1/8% and capped at 8.25%. The interest rate is a fixed rate, not variable. Your particular loans and their interest rates will determine exactly what your fixed consolidation loan interest rate will be if you decide to consolidate.

Should I consolidate?

Each student should answer this question for themselves based on an evaluation of their own situation and the advantages and disadvantages of the consolidation loan option.

How much can I lower my monthly loan payment?

The consolidation loan can reduce the amount of your monthly loan payment by fixing the low interest rate and by extending the repayment term. Extending your repayment term helps reduce the monthly payment amount but increases the total amount of interest that you will pay for the entire loan period. Your current Federal Stafford Loan must be repaid within 10 years, but the Federal Consolidation Loan repayment term can extend to up to 30 years depending on the amount of your loan balance.

Consolidation loan advantages:
One fixed interest rate
One lower monthly payment
No loan fees or credit checks
Flexible repayment terms
No prepayment penalties

Consolidation loan disadvantages:
Loss of borrower benefits on previous student loans
Potential increased total cost
Unsubsidized interest is capitalized
Potential loss of deferments/cancellations

Loans eligible to be included in consolidation:

Subsidized Federal Stafford Loans
Unsubsidized Federal Stafford Loans
Direct Subsidized Federal Stafford Loans
Direct Unsubsidized Federal Stafford Loans
Health Professions Student Loans
(including loans for disadvantaged students)
Health Education Assistance Loans (HEAL)
Federal Graduate PLUS Loan

Federal PLUS Loans
Federal Perkins Loans
Federal Consolidation Loans
Federal Nursing Loans
Direct PLUS Loans
Direct Consolidation Loans
Federal Supplemental Loans for Students (SLS)

Can an old consolidation loan be included in a new consolidation?

Borrowers can consolidate multiple times, so long as each new consolidation loan includes at least one loan that was not consolidated before. However, “reconsolidation” does not allow one to “relock” the interest rate on an existing consolidation loan. Once the interest rate on a consolidation loan is fixed, it does not change. Remember that if you decide to include an old consolidation loan in a new consolidation loan, you will lose the fixed interest rate of the old loan and gain a new interest rate which is the weighted average of the rates of the federal student loans that you consolidate, rounded up to the nearest 1/8% and capped at 8.25%. For the best input on this decision, call your current lender(s) and ask them to calculate the combined interest rate and the separate interest rates so that you can make the best informed decision.

How to pick a consolidation lender:

You have the option to choose any lender. Start by contacting the lenders of your existing eligible loans and compare their consolidation programs. Graduate students who have borrowed through the Regis as Lender Loan Program should contact CollegeInvest at info@collegeinvest.org or in Colorado 1-800-COLLEGE, outside Colorado 1-800-448-2424. You may also contact the federal government at www.loanconsolidation.ed.gov or call 1-800-557-7392.

Compare borrower benefits:

Many lenders offer extra loan benefits to borrowers in the Federal Stafford Loan program and in the Federal Consolidation Loan program. You need to compare benefits between lenders and realize that if you consolidate, you will no longer have the borrower benefits for your previous student loans – you may have new benefits identified for your consolidation loan.

Can loans in school status be included in consolidation?

Federal guidelines require student loans to be in repayment status before being eligible to consolidate.

What repayment terms are available for a consolidation loan?

You may choose from the following available repayment options:
Standard repayment – You pay the same amount each month for the term of your loan. See below for maximum repayment time.
Graduated repayment – Your payments increase gradually, starting with lower monthly payments and increasing until loan is paid within the maximum repayment time.
Income-sensitive repayment – Your annual income determines the amount of your monthly payments along with the total amount that you owe. This option works best for those who expect their monthly income to increase over time.
Extended repayment – You may repay over a 25-year period on a standard or graduated repayment plan if the total of your existing FFELP loans is over $30,000.

For more information, contact your current lender and the following websites:

www.nslds.ed.gov	Use your FAFSA pin to check on student loan status and amounts
www.finaid.org	Information about financial aid
students.gov	U.S. Department of Education financial aid website

Federal Direct Consolidation

1-800-557-7392

www.loanconsolidation.ed.gov

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