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:
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:
Disadvantages of Loan Consolidation:
Eligibility for Loan Consolidation:
To be eligible for loan consolidation, a borrower...
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.
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 http://www.ed.gov/DirectLoan/.
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.