Commonly Asked Questions To The DOE About Consolidation Programs


Is Consolidating right for me? 
If you have trouble meeting your monthly payments, have exhausted your deferment and forbearance options, and/or want to avoid default, a Direct Consolidation Loan may help you.

How can I combine all the multiple payments I make for Federal Student Loans every month?
If you send payments to more than one lender every month, and want the convenience of a single monthly payment, consolidation may be right for you. With a Direct Consolidation Loan, you will have a single government lender and a single monthly payment.

How do I lower my interest rates on my Federal Student Loans?
If you have variable interest rates on your Federal education loans, you may want to consolidate. The interest rate for a Direct Consolidation Loan is fixed for the life of the Direct Consolidation Loan. The rate is based on the weighted average interest rate of the loans being consolidated, rounded to the next nearest higher one-eighth of one percent and can not exceed 8.25 percent.

How do I benefit?
One Lender and One Monthly Payment.
With only one lender and one monthly payment due for student loans, it is easier than ever for borrowers to manage their debt. Borrowers have only one government lender, for all loans included in a Direct Consolidation Loan.

Can I chose the repayment plan options?

Borrowers can choose from multiple repayment plans with various term selections to repay their consolidation loan(s), including an Income Contingent Repayment and an Income-Based Repayment Plan. These plans are designed to be flexible to meet the different and changing needs of borrowers. With a consolidation loan, borrowers can switch repayment plans at anytime. If you select the IBR Plan and want to change at a later date, your only option will be the Standard Plan.

Is there a minimum I need to owe to consolidate?
There is no minimum amount required to qualify for a Direct Consolidation Loan. In addition, consolidation has an affordable cost.

What are my deferment options?
Borrowers with consolidation loans may qualify for renewed deferment benefits. If borrowers have exhausted the deferment options on their current Federal education loans, a consolidation loan may renew those deferment options. In addition, borrowers may be eligible for additional deferment options if they have an outstanding balance on a FFEL Program loan made before July 1, 1993, when they obtain their first Direct Loan.

Will Consolidating reduce my monthly payments?
A consolidation loan may ease the strain on a borrower's budget by lowering the borrower's overall monthly payment. The minimum monthly payment on a consolidation loan may be lower than the combined payments charged on a borrower's Federal education loans.

Does consolidating retain the benefits of the subsidized loans?
There are two (2) possible portions to a consolidation loan: Subsidized and Unsubsidized. Borrowers retain their subsidy benefits on loans that are consolidated into the subsidized portion of a consolidation loan.

When can I consolidate my loans?
Generally, you are eligible to consolidate after you graduate, leave school, or drop below half-time enrollment.

What are the requirements to consolidate a loan?

You must have at 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, Students Loan Forgiveness can help you 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-Contingent Repayment Plan or the Income-Based Repayment Plan. Student Loan Counsel can qualify you for the correct program and assure your approval through the Department of Education.

You may re-consolidate an existing FFEL Consolidation Loan without including any additional loans.

What is the interest rate going to look like?
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%. However, the rate will not exceed 8.25%.

How do I apply for a Direct Consolidation Loan?
Call us now for your FREE consultation with on of our Student Loan Counselor's. We will go over your existing loans and based on your situation qualify you for the best consolidation program that fits your needs.

When do I begin repayment?
Repayment of a Direct Consolidation Loan can begin 60 days after the loan is disbursed, or sooner. We 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.

What is the Public Service Loan Forgiveness Program?
In 2007, Congress created the Public Service Loan Forgiveness Program to encourage individuals to enter and continue to work full-time in public service jobs. Under this program, borrowers may qualify for forgiveness of the remaining balance due on their eligible federal student loans after they have made 120 payments on those loans under certain repayment plans while employed full time by certain public service employers. 

Are there different repayment plans?
There are several repayment plans that are designed to meet the different needs of individual borrowers. You will receive more detailed information on your repayment options from your loan servicer when you consolidate your loan. To learn more about repayment plans, call us today at the number below.