Loan Consolidation

About Loan Consolidation

Federal student loan consolidation lets you combine all of your federal student loans into a single loan with a fixed interest rate. Because you only have one loan from a single lender, you only have one payment to make each month. This can really simplify the repayment process.

You can consolidate most kinds of federal student loans, as long as the loans are in your name. For example, if you took out Stafford loans for each year you were in school, you can consolidate them. But you can't consolidate them with Parent PLUS loans your parents took out to help pay for your education. You also can't consolidate federal loans with alternative (private) loans.

Benefits of Consolidation

There are a lot reasons to consider consolidating your loans.

The Impact of Consolidation

• Convenience. Simply put, making only one student loan payment each month is a lot easier than making a bunch of payments. Consolidating can save you a lot of time and hassle.
• Lower Monthly Payments. Depending on how much you owe, you may be able to extend your repayment period up to 30 years, instead of the standard 10. This can lower your monthly payments considerably, making it easier to pay all your bills from month to month.
• Fixed Interest Rate. When you consolidate, the interest rate of your new loan is based on the weighted average of the interest rates of all the loans you consolidate. This allows you to lock in one rate for the entire life of your loan.
• Repayment Flexibility. As with most other federal student loans, Consolidation loans offer deferment and forbearance options to help you out in case you have trouble making payments.

Other Things to Consider

Even though Consolidation loans can be a great option, there are a couple things that could be seen as disadvantages.

A Way to Keep Your Grace Period

When you apply for a Consolidation loan, you can choose to delay loan processing until each loan you're consolidating reaches the end of its grace period. This allows you to lock in the lower interest rates without forfeiting your grace periods. To make sure you don't miss this option, use our Consolidation Loan Assistant. Note: If you consolidate while you're still in school, you're not eligible for this option.

• Total Cost. The longer you take to pay off a loan, the more interest you end up paying in the long run. If you extend your repayment period to make your monthly payments more manageable, you'll ultimately end up paying more.
• No Grace Period. Consolidation loans don't have grace periods like most federal student loans. This means that your first payment is due soon after the loan is made.