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Consolidation of Federal Loans

Federal Consolidation Loans allow borrowers to combine any number of existing federal educational loans into a single, more manageable loan. Effective July 1, 2010, all new federal student loans, including consolidation loans, come directly from the U.S. Department of Education (ED) under the William D. Ford Federal Direct Loan Program (Federal Direct Loans).*

Most federal educational loans are eligible for consolidation, including subsidized and unsubsidized Federal Family Education Loan Program (FFELP) and Federal Direct Loan Program Stafford and PLUS Loans, SLS, Perkins Loans, FISL, Nursing Student Loans, Health Education Assistance Loans, and Health Professions Student Loans.

Private/alternative loans are not eligible for federal consolidation.

Repayment of consolidation loans begins within 60 days of disbursement. Repayment terms can be extended from 10 years up to 30 years, based on the amount consolidated and the repayment option that you choose.

* Before July 1, 2010, Stafford, PLUS, and Consolidation Loans were also made by private lenders under the Federal Family Education Loan Program (FFELP).

Consolidation Options

There are multiple options for consolidation. A borrower may consolidate:

  • Loan(s) in grace period or in repayment status.
  • Loan(s) in deferment, forbearance, delinquency or default. Borrowers with defaulted loans must first establish a satisfactory repayment arrangement with the loan holder or an agreement to repay the consolidation loan under an income contingent repayment Direct Loan plan.
  • Prior FFELP Consolidation or Direct Loan Consolidation loans with one or more additional loans. For defaulted consolidated loans, the borrower must first establish a satisfactory repayment arrangement with the loan holder or an agreement to repay the consolidation loan under an income contingent repayment Direct Loan plan.
  • A single Direct Loan Consolidation loan.
  • A single FFELP Consolidation loan only if the loan is delinquent, defaulted, or included in an adversary action in a bankruptcy proceeding for loan discharge.
  • Perkins and/or Health Professions loan(s) into a Direct Consolidation loan only if at least one FFELP or Direct Loan is included in the consolidation.
  • If you have no Federal Direct Loans, you still may be eligible to apply for a Direct Consolidation Loan. You may also be eligible for a Direct Consolidation Loan if you intend to apply for loan forgiveness under the Public Service Loan Forgiveness Program.

For Federal Consolidation Loans, the fixed interest rate is the weighted average of the interest rates in effect on the loans at the time that you consolidate, rounded to the nearest higher 1/8th of one percent. The interest rate may not exceed the maximum rate of 8.25%.

Consider the following resources to help you determine if and when consolidating might be the right option for you:

If you have questions about the number of loans you have borrowed, the amount of each loan, or your outstanding balance(s), check with the My Federal Student Aid website or National Student Loan Data System (NSLDS).