Consolidated Loans

Some students choose to consolidate their federal loans.  Loan consolidation allows a borrower to consolidate loans from one or more federal loan programs into one loan.  The consolidation loan simplifies loan repayment by combining several federal education loans into one new loan.

Eligible loans include the Federal Direct Loans, Federal Stafford Loans and Federal Perkins loans.  

Parents and Graduate PLUS loans may be consolidated into a separate PLUS consolidation program.  

There are no fees and no penalty for early repayment.  Repayment terms range from 10 to 30 years depending on amount borrowed.  

The fixed interest rate on a consolidated loan is the weighted average of the loans being consolidated. 

Federal Student Loan Consolidation

Reasons for consolidating federal loans include having a fixed interest rate, lower payments and convenience.

The consolidation loan is considered a new loan. Borrowers will be required to complete an application and promissory note available online. Students must include all information for the loans they wish to consolidate.  

For answers to questions about applying for a Direct consolidation loan through the Direct Loan Program, call the Loan Consolidation Center at 800.557.7392. The Center is open Monday through Friday, 8 a.m. to 8 p.m. (EST). The staff at the center is able to answer your questions about the loan consolidation process or provide you with further assistance.

There are no origination fees and you may consolidate one or any number of loans.  No credit check is required.  

Most of the current deferment and forbearance provisions of Direct Student loans are retained upon consolidations.  These include:  in school deferments, graduate fellowship, rehabilitation training, economic hardship and unemployment.

Important note:  Once a Federal Perkins Loan is consolidated you will no longer be eligible for any of the forgiveness programs.  So please be sure that you are not planning a career in any of the fields that may qualify for loan forgiveness before consolidating a Perkins loan.  

Federal PLUS Consolidation

Reasons for consolidating federal PLUS loans include having a fixed interest rate, lower payments and convenience.

The consolidation loan is considered a new loan. Borrowers will be required to complete an application and promissory note available online. Parents or Graduate students will need to supply information for all loans that are to be consolidated. 

For answers to questions about applying for a Direct consolidation loan through the Direct Loan Program, call the Loan Consolidation Center at 800.557.7392. The Center is open Monday through Friday, 8 a.m. to 8 p.m. (EST). The staff at the center is able to answer your questions about the loan consolidation process or provide you with further assistance.

There are no fees on a federal consolidation loan.  Direct PLUS consolidation loan borrowers are subject to a credit check.

The interest rate will be fixed and is determined by the weighted average of the rates on all the loans being consolidated.

Repayment ranges from 10 to 30 year terms dependent on the amount refinanced.

Most of the current deferment and forbearance provisions of Direct Student loans are retained upon consolidations.  These include:  in school deferments, graduate fellowship, rehabilitation training, economic hardship and unemployment.

Important Note:  In-school forbearance on PLUS loans is not available for PLUS consolidations.  If you are currently on in-school forbearance you will need to use another type of forbearance option for the PLUS consolidation loan.  There are length limits on forbearance options.  Please inquire about options available with your servicer.

Advantages of Consolidated Loans

Consolidating your loans can make your monthly payments more affordable.  Consolidated loans can have extended repayment periods ranging from 10 to 30 years depending on amount borrowed.  Extended repayment terms will result in paying more interest over the life of the loan but may make it easier to remain current on your payment.  There is no penalty for early repayment.  

Consolidated loans have a fixed interest rate.  If you currently have a variable rate on one or more loans, consolidating when rates are low will enable you to save over the long term by avoiding higher future interest rates.  

Loan consolidation also eliminates multiple payments if you have both Federal Stafford Loans and Direct Loans.  One servicer will handle the consolidated loan and require only one payment. 

Repayment on Consolidation Loans

Although borrowers have choices on repayment plans, the length of repayment terms varies depending on the amount refinanced.

Repayment Chart

• Less than $7,500 – term is 10 years
• $7,500 to $9,999 – term is 12 years
• $10,000 to $19,999 – term is 15 years
• $20,000 to $39,999 – term is 20 years
• $40,000 to $59,000 – term is 25 years
• $60,000 or more – term is 30 years

Borrowers have payment options:

Standard repayment plan: Fixed payments determined by amount borrowed and term length.

Graduated repayment plan:  Starts with several years with interest only payments, followed by a fixed payment schedule.

Extended repayment plan: Fixed payment terms; for those who are refinancing $30,000 or more, may extend term to 25 years instead of the 20 years listed in payment chart above. 

Income contingent or income based repayment plan: monthly payments are determined each year by reviewing annual income of borrower.