What does it mean to consolidate my student loans?

Through loan consolidation, a borrower can combine some or all outstanding student loans into one consolidated loan. Loan consolidation may extend a repayment period, eliminate the hassle of dealing with multiple lenders, allow students to repay a loan as a share of income and may give students a break on interest costs. Loan consolidations are available from the Department of Education's direct loan program, as well as private lenders participating in the department's government-guaranteed (FFEL) program.

How will the interest rate be calculated?

The interest rate for a direct consolidation loan is the weighted average of the interest rates on the loans being consolidated, rounded to the nearest higher one-eighth of one percent.

How do I apply for loan consolidation?

To learn more about Federal Direct Loan Consolidation and to apply, visit www.loanconsolidation.ed.gov. Once you have reviewed the information, you may contact the Direct Loan Origination Center (800) 557-7392 if you have questions. You can apply and track the status of your application on-line. Or you can download the application by clicking on Forms and Publications. If you have federal loans borrowed through a FFEL lender, your FFEL lender may also offer a consolidation loan at the same low rate.

What else do I need to know?

• Borrowers must include at least one direct or FFEL loan in the consolidation loan.
• Borrowers do not have to include all of their student loans in the consolidation loan.
• Borrowers may consolidate a single loan and/or an existing direct consolidation loan.
• There is no consolidation fee and no minimum or maximum loan balance.
• Borrowers may choose from a variety of repayment plans, including one based on income.
• Borrowers may prepay a direct consolidation loan at any time.
• A typical loan consolidation requires 60 to 90 days to process, largely because each lender must respond to our request to verify the loan balance.
• If you are applying for Perkins Loan Cancellation (e.g. PT/PA students) do not consolidate any of your Perkins Loans.
• You have 180 days to add loans to your consolidation. Make sure you utilize most of your loan(s)’ grace period(s) prior to adding loans that have a longer grace period to your consolidation (e.g. Health Professions Loan, Loan for Disadvantaged Students).
• For more information, visit www.finaid.org/loans/consolidation.phtml