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Direct Loan Consolidation

Direct Loan Consolidation is a program that was designed to simplify a borrower's repayment of educational loans. Through Consolidation, a borrower can combine eligible educational loans into a single Consolidation Loan requiring single monthly payments. Borrowers may reduce their monthly payments by extending the repayment period with a Consolidation Loan.

What types of loans can be consolidated?

Most federal student loans, including the following, are eligible for consolidation:

  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • Subsidized Federal Stafford Loans
  • Unsubsidized Federal Stafford Loans
  • Direct PLUS Loans
  • PLUS loan from the Federal Family Education Loan (FFEL) Program
  • Supplemental Loans for Students (SLS)
  • Federal Perkins Loans
  • Federal Nursing Loans
  • Health Education Assistance Loans
  • Some existing consolidation loans

Private education loans are not eligible for consolidation. If you are in default, you must meet certain requirements before you can consolidate your loans.


A PLUS loan made to the parent of a dependent student cannot be transferred to the student through consolidation. Therefore, a student who is applying for loan consolidation cannot include the PLUS loan the parent took out for the dependent student's education.


A complete list of the federal student loans eligible for consolidation is available in the application.


What are the requirements to consolidate a loan?

Here are some tips on qualifying for a Direct Consolidation Loan:

  • You must have a least one Direct Loan or FFEL Program Loan that is in a grace period or in repayment.
  • If you want to consolidate a defaulted loan, you must either make satisfactory repayment arrangements on the loan with your current loan servicer before you consolidate, or you must agree to repay your new Direct Consolidation Loan under the
    • Income-Based Repayment Plan
    • Pay As You Earn Repayment Play, or
    • Income-Contingent Repayment Plan
  • Generally, you cannot consolidate an existing consolidation loan again unless you include an additional Direct Loan or FFEL Program loan in the consolidation. However, under certain circumstances you may reconsolidate an existing FFEL Consolidation Loan without including any additional loans.

There are no application fees for a Direct Consolidation Loan, and you may prepay your loan at any time without penalty.

Interest Rate

A Direct Consolidation Loan has a fixed interest rate for the life of the loan. The fixed rate is based on the weighted average of the interest rates on the loans being consolidated, rounded up to the nearest one-eighth of 1%. There is no cap on the interest rate of a Direct Consolidation Loan.

When do I begin repayment?

Repayment of a Direct Consolidation Loan can begin 60 days after the loan is disbursed, or sooner. Your loan servicer will let you know when the first payment is due. The repayment term ranges from 10 to 30 years, depending on the amount of your consolidation loan, your other education loan debt, and the repayment plan you select.


Note: If any loan you want to consolidate is still in the grace period, you can delay entering repayment on your new Direct Consolidation Loan until closer to your grace period end date. You will indicate this when you apply, and the consolidation servicer will wait to process your application until the appropriate time.




To apply for a Direct Consolidation Loan go to studentloans.gov

 

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