What is a Federal Consolidation Loan?
A Federal Consolidation Loan is a loan that repays some or all of 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 consolidated student loans rounded up to the nearest 1/8% not to exceed 8.25%.
A current or prior student with outstanding student loans may choose to refinance those with loans with a Consolidation Loan. The primary benefit of a Consolidation Loan is that it combines existing variable-rate loans into one fixed-rate loan. By locking in a low interest rate now, you may be able to save substantial interest if student loan rates climb in the future. The interest rate on a Federal Consolidation Loan is based on the weighted-average interest rate on loans being consolidated, rounded to the next highest one-eighth percent, not to exceed 8.25%. You will also extend the repayment period, thus lowering your monthly loan payment. Parents may also seek to combine existing PLUS Loans into a PLUS Consolidation Loan. Federal Consolidation Loans may be either direct from the government (Direct Consolidation Loans) or through an outside lender (FFELP Consolidation Loan). Information about Direct Consolidation Loans may be obtained from the school financial aid office for those s
A Federal Consolidation Loan is a loan that you can use to pay off all or a portion of your original eligible federal student loans. You combine (consolidate) your existing federal student loan debt into one new loan.What are the terms of a Federal Consolidation Loan? • The interest rate on a Federal Consolidation Loan is fixed, meaning it will not change over the life of the loan, even if the interest rates on other federal loans go up (or down). • The interest rate is calculated from the weighted average of the interest rates of your existing loans, rounded up to the nearest 0.125%, with a cap of 8.25%. • There are no fees to apply for or receive a Federal Consolidation Loan. • The repayment term is up to 30 years, depending on the total amount of your student loan debt, and there is no pre-payment penalty. Why should you consider consolidation? With a Federal Consolidation Loan, you can benefit from: • Lower monthly payments • Fixed interest rates • Only one payment for your federal
The Federal Consolidation Loan Program lets you combine your various student loans into a new consolidation loan, often resulting in lower, more affordable payments. Am I eligible for loan consolidation? You are eligible for a consolidation loan if you are currently in a grace period, in repayment, or if you are in default and you have made and fulfilled satisfactory repayment arrangements with the holder of each defaulted loan being consolidated. Which loans are eligible for consolidation? FFELP loans (Stafford, PLUS, GRAD PLUS, SLS, and consolidation loans) FDLP loans (Stafford, PLUS, and consolidation loans) FISL loans Perkins loans Health Professions Student Loans (HPSL), including Loans for Disadvantaged Students (LDS) Nursing Student Loans (NSL) Health Education Assistance Loans (HEAL) Can loans be added after consolidation? You may add any eligible loans made before or after the date of consolidation (that were not included in the consolidation), provided the request is made wit
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%.
