Loan Consolidation

Loan consolidation enables a borrower with student loans from different lenders to obtain one loan, with one interest rate and repayment schedule. The following loan programs can be consolidated:
  • Federal Stafford Loans (subsidized and unsubsidized)
  • Federal Perkins Loans
  • Federal Supplemental Loans
  • Federal PLUS Loans (parent loans made after October 16, 1986)
  • Grad PLUS Loans (Direct and FFEL)
  • Health Professions Student Loans (HPSL)
  • Loans to Disadvantaged Students (LDS)
  • Nursing Training Act Student Loans

Loan consolidation is not for everyone. Consolidation loans are intended for those who need greater flexibility in repaying their student loans, or who seek to increase their monthly disposable income. In general, most borrowers do not consolidate their loans until their grace period ends. This allows borrowers the full benefit of their initial grace period.

Advantages of Loan Consolidation:
  • Extended repayment period up to 30 years
  • Lower monthly payment amount
  • Convenient, single monthly payment
  • May help protect your credit rating
  • No prepayment penalty

Disadvantages of Loan Consolidation:
  • Extended repayment period adds to total interest expense
  • Interest rate may be higher than rate for original loans. (Interest rate is the weighted average between the loans being consolidated, rounded upward to the nearest 1/8 of 1%).
  • Federal Perkins Loan borrowers may lose eligibility to cancel their debt for full-time employment in certain fields of teaching, public service, service in the Peace Corps or ACTION, or service in the military. Please refer to your original promissory note for more information on your cancellation benefits.

Eligibility for Loan Consolidation:
To be eligible for loan consolidation, a borrower...
  • must be in a grace period or in repayment status on all loans being consolidated;
  • if in default, must have made satisfactory arrangements to repay the defaulted loan; and
  • must not have another consolidation loan application pending.

Generally, a borrower submits a consolidation loan application to a lender holding at least one of the loans to be consolidated. If none of those lenders agree to consolidation, the borrower may apply to any other lender participating in the consolidation loan program.

Federal Direct Loan Consolidation
The U.S. Department of Education offers a Federal Direct Loan Consolidation Program. The Direct Consolidation Program allows Federal Direct Loan, as well as Federal Family Education Loan (Stafford, PLUS) borrowers, to combine one or more federal loans into one new loan.
  • Federal loan programs may be consolidated under the Federal Direct Consolidation Program
  • Interest is calculated on the weighted average of the interest rates on the loans being consolidated, rounded to the nearest higher 1/8 of 1%). This rate is not variable and applies for the life of the loan.
  • Extends repayment period up to 30 years
  • No prepayment penalty

For further information or to apply, contact the U.S. Department of Education Federal Direct Loan Consolidation Program at 1-800-557-7392 or at

Loan Consolidation for Married Couples
The loan consolidation program now allows a married couple to consolidate their individual loans if they agree to be held jointly and severally liable for repayment without regard to the amount of their individual indebtedness and any future change in their marital status. Only one spouse needs to meet the eligibility requirements for a consolidation loan.
NOTE: Both borrowers must meet all requirements to qualify for deferment.

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