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Why should I consolidate my loans?
Loan consolidation allows you to refinance federal student loans totaling at least $20,000. Your existing lenders are paid in full and a new consolidation loan for the combined balance is originated, for a new term, and often at a new interest rate.
Some of the benefits of consolidating your loans are:
• Lower your monthly payments by up to 51%
• Experience No Fees and No Credit Checks
• Lock in a low fixed interest rate for the life of the loan
• Pay off your loans early with no prepayment penalties
• Extend your repayment period up to 30 years
• Convenient single source of student loan repayment
• Helps lower Debt-to-Income ratio (home purchase or refinance)
• Fixed Interest Rates of low as 6.625%
• Remain eligible to apply for deferment and forbearance
• Use savings to pay off other high interest rate debt
How long does it take to consolidate my loans?
It takes approximately 3 to 4 weeks to process your loans once we receive your completed application. During the application process, we will send you periodic email updates. When your loan consolidation is complete, your new servicer will notify you and provide you with a repayment schedule. You have 180 days after your Federal Consolidation Loan's issue date include any additional eligible loans you may have left out of your original consolidation.
Are there any fees to consolidate my loans?
There are absolutely no fees for borrowers who wish to consolidate their federal student loans.
Do I have to pay while the loans are being consolidated?
It is important that you continue to make all of your regular payments on the loans that you are consolidating until you receive your new loan disclosure statement. You may also request a temporary forbearance from your loan servicer while your loans are being consolidated.
How do the lenders determine my new interest rate?
You will receive a fixed interest rate on your loan, based on the weighted average of the interest rates of the loans you are consolidating, rounded up to the nearest 1/8th percent or 8.25%, whichever is less.
If I defer my consolidated loan, and some of my original loans were subsidized, will the government pay the interest?
The government will still pay the interest on the portion of your consolidated loan that was originally subsidized.
What types of student loans are eligible for consolidation?
Eligible Federal student loans include:
- DSS- Direct Subsidized Stafford Loans
- DUS- Direct Unsubsidized Stafford Loans
- DPLUS- Direct PLUS Loans
- DUCON- Direct Unsubsidized Consolidation Loan, including Direct PLUS Consolidation Loans
- SS-Subsidized Federal Stafford Loans, formerly Guaranteed Student Loans (GSL)
- US- Unsubsidized and Nonsubsidized Federal Stafford Loans
- NSL-Federal Nursing Loans
- PERK- Federal Perkins Loans, formerly Nations Defense/National Direct Student Loans (NDSL)
- PLUS- Federal PLUS (Parent) Loans
- SCON- Subsidized Federal Consolidation Loans
- UCON- Unsubsidized Federal Consolidation Loans
- SLS- Federal Supplemental Loans for Students (formerly Auxiliary Loans to Assist Students (ALAS) and Student PLUS Loans)
Can I still apply if one of my student loans is in default?
Yes, however due to Federal Regulations, we are not permitted to consolidate loans that are currently in default. A loan is considered to be in default only after a borrower fails to make payment on the loan for 270 consecutive days. If you remedy your default, we will be able to offer you a loan. You can also consolidate all loans not in default immediately. When you remedy your defaulted loan, you may add it to your consolidation loan up to 180 days after consolidation.
What if my spouse and I both have education loans we wish to consolidate?
You may consolidate your student loans separately. Department of Education Regulations no longer allows for spouses to combine their student loans into one federal student loan consolidation.
What if I have already consolidated my loans?
If your have a previous Federal Consolidation Loan but you want to reconsolidate again, you may do so as long as you have at least one federal Stafford or Perkins student loan not included in your original consolidation.
What if my loans are in a grace period status?
If your loans are in a grace period status, you may apply for consolidation and receive an additional 0.60% discount to your loan's interest rate. Since the approval process takes 3 to 4 weeks, it's critical to apply for consolidation in advance so you can take advantage of this benefit. When you fill out your application, be sure to include your grace period end date. We will hold your application until 45 days prior to the end of your grace period before we begin processing.
What are my repayment plan options?
The repayment term is determined by the amount of your total student loan debt, including any federal loans you are consolidating and private student loans not eligible for consolidation.
| Loan Balance |
Eligible Term (Months) |
Eligible Term (Years) |
| $7,500 - $9,999.99 |
144 |
12 |
| $10,000 - $19,999.99 |
180 |
15 |
| $20,000 - $39,999.99 |
240 |
20 |
| $40,000 - $59,999.99 |
300 |
25 |
| $60,000 and Greater |
360 |
30 |
- Level/Standard Payment Plan - This option provides equal monthly payments over the term of the loan.
- Select 2/Graduated Payment Plan - This option allows for interest-only payments first two years of repayment. In the third year, payments increase to level installments of principal and interest payments for the remainder of the loan.
- Select 5/Graduated Payment Plan - This option allows for interest-only payments first two years of repayment. In the third year through fifth years, payments increase to include a portion of principal. In the sixth year, payments increase to level investments of principal and interest payments for the remainder of the loan.
- Income-Sensitive Payment Plan - in which the amount of your payments will be adjusted annually based on your expected total monthly gross income from employment and all other sources. Payments may increase or decrease. If you select this option, your initial repayment amount will be based on a standard or graduated payment plan. After your consolidation loan is made, you will then be required to submit additional information to assist the lender in determining your new payment which is updated annually. You must also submit documentation of student loan debt. If you are consolidating jointly with your spouse, payments will be based on your total household income from all sources.
- Extended Payments - in which you may repay over a 25-year period on a level or graduated payment plan if you have loans totaling in excess of $30,000.
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When does repayment begin?
You are required to begin repayment on your loan within 30 days of its funding date. Once your loan has been funded, you will receive a repayment schedule from your new servicer.
Can I change my repayment plan in the future?
Some lenders allow you to change your repayment term once a year. This flexibility allows you to adjust your payments according to your current financial situation. However, many borrowers choose a standard plan and simply pay more when they have adequate financial resources.
Are there any penalties for paying off the loan early?
There are absolutely no penalties for paying off your loan early.
Can I pay more than my minimum monthly payment?
You can pay more than your monthly payment if you have the financial resources to do so. Since extending your repayment term results in an increase in the interest costs you pay over the life of the loan, paying extra each month allows you to reduce these interest costs. Plus, there are no penalties for early repayment.
What if I need to defer my Federal Consolidation Loan?
You may defer your Federal Consolidation Loan if you meet the eligibility requirements for education reasons, unemployment, economic hardship or Peace Corps Service.
I am in forbearance can I still consolidate?
Yes, you may consolidate while in forbearance, once consolidated you can request a forbearance from your new loan servicer. Your servicer may allow you to temporarily reduce your monthly payment amount, extend repayment length, or temporarily stop making payments when you apply for forbearance. However, forbearance is generally granted at the discretion of your servicer, and you may be asked to provide a reason or documentation to prove your eligibility.
Can I consolidate while in deferment?
Yes, you may consolidate while in an eligible deferment. Depending on when your loans were first disbursed, the interest rate on your student loans could be reduced by .60% during your deferment periods. Consolidating your student loans while in deferment could allow you to lock in the lower deferment interest rate, reducing the cost of your consolidation loan. You can immediately re-apply for deferment, as long as you still meet the requirements your consolidation loan will be placed in deferment.
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