What is a Federal Consolidation Loan?
Consolidation Loans offer you the opportunity to combine different types of federal student loans. Consolidation is an option that will simplify your repayment. If you have a William D. Ford Direct Loan with Stafford and/or Perkins Loans you can currently consolidate through the Department of Education by contacting the USDE Consolidation Loan Information Center online, or by calling 1-800-557-7392.
A Federal Consolidation Loan is a loan that repays all your outstanding eligible federal student loans, and replaces the multiple payments you may be making each month with a single student loan payment. In most cases, your repayment term is extended to make your monthly payments more affordable; however, you may always prepay your loan with no penalties. The interest rate on the consolidation will be a fixed rate for the entire term equal to the weighted average interest rates of your outstanding student loans rounded up to the nearest 1/8% not to exceed 8.25%.
A Federal Consolidation loan is one of several loans in the Federal Family Education Loan Program (FFELP). A Consolidation loan offers eligible borrowers the opportunity to consolidate all or some of their outstanding federal educational loans into a single new loan, even if their present student loans are held by more than one lender and are of different types.
