Loan Consolidation

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Loan Consolidation

If you have student loans other than Direct Loans, you may want to apply for a Direct Consolidation Loan. Consolidation means making only one monthly payment to cover all your loans. There may be several advantages for you if you consolidate. Because the interest rate will be the same as for Direct Loans, you may be able to pay less interest than you're paying on your current loans. You may be able to reduce your monthly payments. You can also choose the repayment plan that best suits your financial circumstances.

To consolidate under Direct Loans, you must have at least one Direct Loan or FFEL Program loan.

Listed below are the types of loans that may be consolidated:

FFEL Stafford Loans (subsidized and unsubsidized)

Direct and Federal PLUS Loans

Guaranteed Student Loans (GSL)

Federal Insured Student Loans [FISL]

Federal Supplemental Loans for Students (SLS)

Auxiliary Loans to Assist Students (ALAS)

Federal Perkins Loans

National Direct/Defense Student Loans (NDSL)

Health Professions Student Loans (HPSL)

Health Education Assistance Loans (HEAL)

Loans for Disadvantaged Students (LDS)

Nursing student loans

Direct and Federal Consolidation Loans You can consolidate your loans at any time--while you're still in school, during your six-month grace period, or after you begin repayment. If you consolidate while you're in school, you'll receive a grace period on your consolidation loan. Note that you can consolidate only Direct Loans and FFELs while you're in school; the other types of loans listed in this section may be consolidated only after you leave school.

If you want to consolidate while you're in school and you're attending a Direct Loan school, you must have at least one fully disbursed Direct Loan or FFEL in an "in-school" period. If you're attending a non-Direct Loan school, you must have a Direct Loan, and you must have either a Direct Loan or FFEL in an "in-school" period. An "in-school" period is the period before a loan enters the grace period and while the borrower is enrolled at least half time at an eligible school.

Note: If you want to consolidate during your grace period, wait to apply until two months before the grace period ends. Repayment on consolidation loans begins within 60 days of the first loan disbursement, which means your grace period will be cut short if you apply too early.

If you have only FFEL Program loans, once you leave school you can consolidate them under Direct Loans only if you can't get an FFEL consolidation loan, or you can't get one with income-sensitive repayment terms acceptable to you.

Similar conditions apply to parents. They must have an outstanding balance on a Direct PLUS Loan or a Federal PLUS Loan (under the FFEL Program). Parents must not have an adverse credit history or, if so, must either document extenuating circumstances or obtain an endorser for the loan who has no adverse credit history. You may not be an endorser for your parent.

Even defaulted loans may be consolidated if you agree either to repay your Direct Consolidation Loan under the Income Contingent Repayment Plan or make satisfactory repayment arrangements (for consolidation purposes, defined as three consecutive, voluntary, on time, full monthly payments).

Note: A married couple may consolidate their loans jointly if at least one spouse meets the requirements for loan consolidation. Both will be responsible for repayment of the loan, even if one spouse dies or they separate or divorce.

For more information on consolidation, contact your financial aid office or the Direct Loan Consolidation Department at 1-800-557-7392.

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