Welcome to Federal Loan Consolidation

First Consider the Cost

There are many benefits to consolidating loans but you should keep in mind that although consolidation can simplify loan repayment and lower your monthly payment, it also can significantly increase the total cost of repaying your college loans.

Federal Government Student Loan Consolidation offers lower monthly payments by providing borrowers up to 30 years to repay their college loans. You will make more payments and pay more in interest in the long term.

Federal loan consolidation, in some cases, will double your total interest expense over the life of the loan. So, if you don't need monthly payment relief, you should compare the cost of repaying your unconsolidated loans against the cost of repaying a consolidation loan over longer period of time. Existing loan cancellation fees can also be an issue.

Perkins Federal Loan Consolidation

It is possible to consolidate Perkins Loans into a Federal Consolidation Loan if borrowers include at least one Direct Loan or Federal Family Education Loan (FFEL) in their request. Perkins Loans cannot be included in a Direct Consolidation Loan by themselves and all Perkins Loans consolidated into the Direct Loan Program will be included in the unsubsidized portion of the Direct Consolidation Loan. 

You should carefully weigh the advantages and disadvantages of including a Perkins Loan in a federal consolidation loan. While the borrowers gain the benefits of the Direct Consolidation Loan Program, they also lose the many benefits that are associated with the Perkins Loan Program.

What are the Immediate Benefits of a Federal Consolidation Loan?

Federal Consolidation Loans typically allow borrowers to combine one or more of their Federal education/college loans into a new loan that offers several advantages that are described below:

Usually You Will Have One Lender and One Monthly Federal Loan Payment

With one lender and one monthly loan bill, it is easier for borrowers to manage their educational debt. Borrowers will have only one lender, the U.S. Department of Education, for all loans included in a Federal Consolidation Loan. 

Flexible Repayment Options

Federal consolidation loan recipients can choose from four different plans to repay their loan.  These plans are specifically designed to be flexible to meet the different needs of borrowers. With a federal consolidation loan, borrowers can change repayment plans or options at anytime during the life of the loan

Reduced Monthly Payments

A Federal consolidation loan may ease the financial burden for a loan recipient by lowering the monthly payment. The minimum monthly payment on a Federal Consolidation Loan may be lower than the combined payments charged on a borrower's existing college education loans.

You will have Different Deferment Options

Borrowers with Federal consolidation loans may qualify for renewed deferment and repayment benefits. When borrowers have exhausted the deferment options on their current Federal education/college loans, a Federal Consolidation Loan may renew many of those deferment options. Borrowers may also be eligible for additional deferment options if they have an outstanding balance on a FFEL Program loan made before July 1, 1993.

Can you consolidate an existing consolidation loan?

Yes under three specific conditions:

First, borrowers can consolidate existing consolidation loans into a new Federal Consolidation Loan if they include at least one other FFEL or Direct Loan into the new federal consolidation loan. 

Second, borrowers can consolidate a single Federal Consolidation Loan if the loan is in default status. 

Lastly, borrowers can consolidate a single Federal Consolidation Loan if they intend to apply for loan forgiveness under the government Public Service Loan Forgiveness Program.