Loan consolidation may be an option if you have multiple lenders, variable interest rates, significant loan debt and/or different loan types. It allows you to combine multiple federal loans into one new loan at a fixed interest rate. A federal consolidation cannot include private loans. Students do not have to be in repayment or grace status to consolidate.
A growing number of lenders are leaving the federal student loan program because it is no longer profitable. Contact your lender first to determine whether or not the lender still participates in federal loan consolidations.
For more information go to William D. Ford Direct Loan Consolidation at:
www.loanconsolidation.ed.gov or call 1-800-557-7392
Eligible loan types
Stafford Loans, Perkins Loans, Health Profession Student Loans (HPSL),
William D. Ford Direct Loans, Grad PLUS Loans
For a list of all your federal loans – www.nslds.ed.gov
Loan consolidation offers both benefits and disadvantages.
Benefits:
- Fixed interest rate
- Single lender
- Lower, more manageable payment
- Extended repayment period (up to 30 years based on loan total)
Disadvantages:
- Longer repayment term
- Greater interest paid over life of loan
- Interest may be slightly higher that on original loan due to rounding
- May lose certain deferment options
- May lose current forgiveness benefits
- May lose current loan incentives
Posted: April 22, 2009
