Loan Consolidation
About Federal Student Loans
If you make more than one monthly student loan payment, you may find life easier with one affordable payment. A Direct Consolidation Loan brings all of your federal student loans together with a fixed interest rate. The rate is determined as an average of the loan rates that are being consolidated (rounded up to the nearest one-eighth percent). Consolidation gives you up to 30 years to repay your loan. Keep in mind that increasing the repayment period also increases the total amount of interest you will pay over time.
You'll need to work with the Department of Education (Department) to get a Direct Consolidation Loan.
Before consolidating your loans, talk with your servicer about all of your repayment options. You can learn more about the pros and cons of loan consolidation at the Department's website.
Most federal student loans, including subsidized and unsubsidized Direct and FFELP Stafford Loans, are eligible for consolidation. Private education loans are not eligible to be consolidated with federal student loans. Also, if your loans are in default (270 days or more past due), you must meet certain requirements prior to consolidating them.
You'll need to work with the Department of Education to get started. Apply online or print an application at LoanConsolidation.ed.gov or call 800.557.7392 (U.S.) or 334.206.7400 (International) for an application package.
Special Direct Consolidation
The Special Direct Consolidation Loan opportunity was a short-term initiative offered by the Department from January 17 through June 30, 2012. The opportunity was available for borrowers with at least one federal student loan with the Department and at least one federal student loan borrowed from a bank or other lender instead of the federal government (FFELP loan).
Benefits of a Special Direct Consolidation Loan included a .25% interest rate reduction on every consolidated FFELP loan, and another .25% interest rate reduction if you signed up to make automatic monthly payments.
To learn more visit SpecialDirectConsolidationLoan.org.
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