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Consolidation

What is consolidation?

Loan consolidation allows you to refinance any or all outstanding federal student loans and create a single new loan with one monthly payment. The new loan will have a fixed interest rate, new terms, and may have an extended repayment period of up to 30 years.

Is consolidation right for you?

To be eligible for loan consolidation, you must agree to the terms and conditions listed on the promissory note, which include:

  • You are not enrolled in school, or you are enrolled on a less than half-time basis.


  • You are in the "grace period" or already in repayment on all loan(s) you plan to consolidate.


  • If you are in default, you must either make satisfactory repayment arrangements with your current lender or agree to repay the consolidating lender under an income-sensitive repayment plan.


  • You must agree to notify the lender of any address changes.

Which loans can you consolidate?

Not all loans are eligible for consolidation. Private loans from banks, schools or family cannot be consolidated. Loans from the following programs are eligible for consolidation:

  • Federal Parent Loans for Undergraduate Students (PLUS)


  • FFELP Subsidized Stafford loans


  • FFELP Unsubsidized Stafford loans


  • Federal Insured Student loans (FISL)


  • Federal Guaranteed Student Loans (GSL)


  • Federal Supplemental Loans for Students (SLS)


  • Auxiliary Loans to Assist Students (ALAS)

  • Federal Perkins Loans (formerly National Defense/Direct Student Loans-NDSL)


  • Health Professions Student Loans (HPSL)


  • Heath Education Assistance Loans (HEAL)


  • Loans for Disadvantaged Students (LDS)


  • Nursing Student Loan Program loans (NSLP)


  • Federal Direct loans


  • Direct Subsidized Stafford loans


  • Direct Unsubsidized Stafford loans


  • Direct Subsidized Consolidation loans


  • Direct Unsubsidized Consolidation loans


  • Direct Parent Loans for Undergraduate Students (PLUS) loans


  • Direct Parent Loans for Undergraduate Students (PLUS) Consolidation loans

How can you apply for consolidation?

The first step is to contact your current lender(s). If you have only one lender, you must apply through them. If you have more than one lender you can choose which you would like to consolidate through. If none participate, you may apply through any other participating lender.

What is student loan consolidation?

The student loan consolidation program is for those people who have multiple loans and want to "combine" all or some of them into one new loan. The new consolidation loan will pay the student loans included in the consolidation in full.

Are there advantages to consolidating my loans?

You will have one monthly payment instead of several. If you are married and both you and your spouse have student loans, the loans that qualify can be consolidated and, as a couple, you will have only one monthly payment. Depending on your student loan indebtedness, you could have up to 30 years to repay your consolidated loan. You will also have the choice of level, graduated or income sensitive repayment plans.

And, the disadvantages?

If you extend the repayment period, you will pay more interest on the new loan.

What about the interest rate?

The interest rate on consolidation loans is the weighted average of the loans being consolidated rounded up to the nearest 1/8 of 1% or 8.25%, whichever is less.

Will I still be eligible for deferments?

Depending upon the loans included in your consolidation, a deferment may be available if you, are in school at least half-time, unemployed, or suffer from an economic hardship. The U.S. Department of Education will pay the interest that accrues during an eligible deferment period on the subsidized portion of a consolidation loan. You are responsible for the interest that accrues during deferment on any other loan types.

What if I complete the consolidation process but did not get all of my loans included?

You will have up to 180 days after the consolidation is complete to include eligible loans. However, after the 180-day period, eligible loans that were not included may not be added. New loans obtained after you consolidate may be consolidated in a new consolidation loan.

Can I consolidate defaulted loans?

The holder of the defaulted loan(s) must certify that you have made at least three consecutive monthly payments. Or you must agree to repay your consolidation loan under the income sensitive repayment plan. You must also be in a current repayment status. Additional conditions may exist, so be sure to contact the holder of the defaulted loan(s) before starting the consolidation process.

If I decide to consolidate, how do I get an application?

Check with your current lender(s) to see if they participate in the Federal Consolidation Loan Program. If they do not, call College Access Network at 303-305-3500 or 800-727-9834 for a list of participating lenders.

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