Federal Consolidation Loan
Loan consolidation is a way to combine your existing federal student loans into one new loan, reducing the number of monthly bills and possibly lowering your monthly payment.
What is a Federal Consolidation loan?
A federal consolidation loan offers eligible borrowers the opportunity to refinance all or some of their outstanding educational loans into a single new loan.
How do I apply for a Federal Consolidation Loan?
The Federal Direct Loan Consolidation website provides an online application. You can apply during your loan grace period, once your loan has entered repayment, or during periods of deferment or forbearance.
You will need a list of your loans, lenders, account numbers and interest rates. See the National Student Loan Data System (NSLDS) for loan servicer information.
Which federal loans can I consolidate?
- Subsidized and Unsubsidized Federal Stafford Loans
- Federal Perkins Loans
- Federal Graduate PLUS Loans
- Federal Parent PLUS Loans (although, you may not consolidate your parent's PLUS loan with your own)
- Federal Consolidation Loans, under certain conditions
Contact your lender for more information if you have other Federal loans. Private loans cannot be combined with federal loans.
Will this affect my interest rate?
The Federal Consolidation loan interest rate is a fixed rate equal to the weighted-average of the interest rates of the loans being consolidated rounded up to the nearest 0.125%, but not exceeding 8.25%.
Will I lose my grace period?
You may delay the consolidation of any loans that are in the grace period by indicating the grace period end date on the Federal Direct Consolidation Loan Application and Promissory Note. See the Direct Consolidation Loans website for more information about the application process.
Are there any disadvantages to loan consolidation?
Consolidation can significantly increase your total interest costs, because you'll be making smaller payments over a longer time. Depending on the loan balance and interest rate, consolidation can double or triple the total interest you will pay.
If you consolidate a Federal Perkins loan, you will not be eligible for any Perkins loan cancellation benefits. See our Loan Repayment page for more information on loan cancellation programs.