Federal Consolidation Loan Program

This program enables you to combine any or all of your eligible outstanding federal student loans into one new loan with one monthly payment. (Some lenders require a minimum loan amount.) The new loan will have a low fixed interest rate and new terms. It may have an extended repayment period of up to 30 years. For details, download the EdFund brochure, 2006-2007 Loan Consolidation (2 pages).

Loans Eligible for Consolidation

Private loans from banks, schools or family members cannot be consolidated. Loans from the following programs are eligible:

  • Subsidized and Unsubsidized Federal Stafford Loans
  • Federal Perkins Loan
  • Health Professions Student Loans (HPSL)
  • Health Education Assistance Loans (HEAL)
  • Loans for Disadvantaged Students (LDS)
  • Federal Graduate and Professional Student PLUS Loans
  • Federal Parent PLUS Loans. (Parents may consolidate existing Federal Parent PLUS Loans, but students may not consolidate Federal Parent PLUS Loans with student loans.)

Repayment Plan Types

Standard Fixed monthly payments.
Graduated Payments start low and gradually increase.
Income-sensitive Payments are adjusted every year, based on your monthly gross income.
Extended repayment Terms up to 25 years, fixed or graduated payment.

Before You Consolidate . . .

Obtain your federal loan history and lender contact information at www.nslds.ed.gov. Compare your current loans’ interest rates, deferment options and repayment incentives with those of a Federal Consolidation loan. Ask whether you will be eligible for your full grace period.

Consolidation Drawbacks

  • If the loans you consolidate are repaid over a longer term, your total cost will increase.
  • You will lose your current borrower benefits.
  • The interest rate reductions and other benefits you are offered may not be as favorable as the ones you receive on your existing Federal Stafford and PLUS Loans.
  • You may end up with a higher interest rate on the consolidation loan than on some of your original loans, because the interest rate is calculated on a weighted average and then rounded up.
  • Married students with jointly consolidated loans: If you divorce, both parties are responsible for repaying the full amount.

Alternatives to Consolidation

  • Change your current repayment plan to lower your monthly payment.
  • Request combined billing, to simplify repayment.
  • Apply for a deferment or forbearance, to postpone or reduce your monthly payment.

For More Information

www.edfund.org
www.federalconsolidation.org
www.loans4students.org
www.studentloan.com
www.ibrinfo.org