Office of Student Aid : Loans : Loan Consolidation : Loan Consolidation Basics

Federal and private consolidation loans allow you to reduce your monthly student loan payments by extending your repayment terms and may allow you to obtain a better, fixed interest rate. When you consolidate, your consolidation loan lender pays the outstanding balances on the loans you consolidate. In essence, you refinance your education debts.

Federal Student Loans:

Consolidation is available to most borrowers of federally funded educational loans including:

• Federal Direct Stafford Loan (subsidized and unsubsidized)
• Federal Perkins Loan
• Federal Direct Parent Loan (Parent Loan)
• Federally Insured Student Loans (FISL)
• Federal Supplemental Loan for Students (SLS)
• Primary Care Loans, formerly known as Health Professions Student Loans (HPSL)
• Health Education Assistance Loan (HEAL)
• Nursing Student Loan Programs
• Auxiliary Loans to Assist Students (ALAS)

Federal consolidation loans have no fees. To qualify for federal loan consolidation, borrowers must:

• Be in their grace period, or currently repaying their educational loans
• Not be more than ninety days delinquent on educational loan payments.

For more information contact:

Federal Direct Consolidation Loans Information Center (1-800-557-7392)

Private Alternative Student Loans:

• Alternative lenders may require you to be in active repayment before you can apply.
• Ask private lenders about possible consolidation loan fees or other costs before you apply.
• Most lenders do not consolidate federal loans together with private loans.

To determine the interest rate, loan consolidation agencies weight the average of all the loans included in the consolidation, rounded up to the nearest 1/8 of a percent.

Typically, borrowers may prepay all or part of consolidation loans at any time without penalty.