JB Pritzker, Governor, State of Illinois

Loan Consolidation

Loan consolidation allows a lender to consolidate a borrower’s loans into a single loan by paying off the outstanding balances of selected loans. The interest rate of a consolidation loan will be a fixed rate. It is determined by the weighted average of the rates of all the loans being consolidating, rounded up to the nearest 1/8th of one percent or 8.25%, whichever is less.

Loan consolidation can be used as a way to manage debts. In some cases, consolidation can reduce monthly payments. It can also have some drawbacks. In addition to increasing the total consolidated debt, the borrower may lose eligibility for certain types of deferments if they consolidate.

Refer to the Common Manual for complete details on participating in this program.