Student Loan Consolidation

Consolidation Loans combine several student loans into one bigger loan from a single lender. Consolidation loans are available for most federal loans, including FFELP (Stafford, PLUS and SLS), LDS, FISL, Perkins, Health Professional Student Loans, NSL, HEAL, Guaranteed Student Loans and Direct loans. PCL Loans are NOT eligible for a Federal Consolidation due to the service component of the loan.

Severe legislative cuts made by Congress have made federal student loan consolidation uneconomical. This, combined with the credit market deterioration, has caused most lenders to suspend participation in the federal consolidation loan program. The U.S. Department of Education is still offering student loan consolidation http://www.loanconsolidation.ed.gov/

Interest Rates

The interest rate on a consolidation loan is the weighted average of the interest rates on the loans being consolidated, rounded up to the nearest 1/8 of a percent and capped at 8.25%.

Pro’s to Consolidation:

  • Have only one lender and one monthly payment.
  • Turn variable-rate loans into fixed-rate loans.

Con’s to Consolidation:

  • Consolidating fixed interest loans will increase your interest rate because consolidation interest rates are calculated using the weighted average interest rates of the underlying loans PLUS 1/8%.
  • Consolidation Loans have no grace period. If you do want to consolidate your loans, you will want to wait until the end of your grace period, but before you enter repayment because the consolidation rate will be lower.
  • It is not recommended to consolidate Perkins Loan because of repayment benefits that are lost once a Perkins Loan is consolidated.
  • Extending repayment over a longer period of time will cost you more in interest.

Loan Consolidation Calculator

Federal Direct Consolidation

Public Service Loan Forgiveness Employment Certification Form

Public Service Loan Forgiveness Employment Certification Instructions