- The number or type
of eligible loans you want to consolidate.
- The type of school
- The interest rate you
would be charged on a consolidation loan.
- The types of repayment
schedules available to you.
Direct Consolidation Loans are available from the
U.S. Department of Education. FFEL Consolidation
Loans are available from participating lenders such
as banks, credit unions, and savings and loan associations.
There are three categories of Direct Consolidation
If you have loans from more than one category, you
still have only one Direct Consolidation Loan and
make only one monthly payment.
- Direct Subsidized Consolidation Loans
- Direct Unsubsidized Consolidation Loans
- Direct PLUS Consolidation Loans.
Under the FFEL Program, you can receive a Subsidized
and/or an Unsubsidized FFEL Consolidation Loan,
depending on the types of loans you’re consolidating.
(Federal PLUS Consolidation Loans are included under
the Unsubsidized FFEL Consolidation Loan category.)
All the loans discussed in
this website are eligible for consolidation, and
others can be included. For a FFEL Consolidation
Loan, a participating lender can give you a complete
list of eligible loans. For a Direct Consolidation
Loan, the Loan Origination Center’s Consolidation
Department can give you a complete list. Contact
You can get a FFEL Consolidation Loan during your
grace period, once you’ve entered repayment, or
during periods of deferment or forbearance. If you’re
on a federal student loan, you still might be able
to receive a FFEL Consolidation Loan, provided the
defaulted loan is not subject to a judgment or wage
garnishment. For more information, contact a lender
that participates in the FFEL Consolidation Loan
You can also get a Direct Consolidation Loan during
your grace period, once you’ve entered repayment,
or during periods of deferment or forbearance. You
must consolidate at least one Direct Loan or FFEL,
however. If you don’t have a Direct Loan, but you
have a FFEL, you must first contact a FFEL lender
who makes FFEL Consolidation Loans to ask about
getting a FFEL Consolidation Loan. If you can’t
get such a loan, or you can’t get one with income-sensitive
repayment terms acceptable to you—and you’re eligible
for the Direct Loan Income Contingent Repayment
Plan—you’re eligible to apply for a Direct Consolidation
Loan. If you’re in default on a federal student loan,
you might be able to receive a Direct Consolidation
Loan. For more information, contact the Loan Origination
Center’s Consolidation Department.
One difference between Direct and FFEL Consolidation
Loans is that you can get a Direct Consolidation
Loan while you’re in school. You must be attending
at least half time
and have at least one Direct Loan or FFEL in an
“in-school period.” (Generally, your loan is in
an in-school period if you have been continuously
enrolled at least half time since the loan was disbursed.)
In addition, if the school you’re attending is not
a school that participates in the Direct Loan Program,
at least one of the loans you consolidate must be
a Direct Loan.
You’ll be given more information about Consolidation
Loans during entrance and exit counseling sessions
at your school. For a FFEL Consolidation Loan, you
can also contact the consolidation department of
a participating lender for an application or more
information. (Your parents should do the same thing
if they want to apply for a FFEL PLUS Consolidation
Loan.) If the same holder holds all the loans you
want to consolidate, you must obtain your consolidation
loan from that holder, unless you haven’t been able
to get a loan with income-sensitive repayment terms.
For Direct Loans, you (and your parents, for a Direct
PLUS Consolidation Loan) can contact the Direct
Loan Origination Center’s Consolidation Department
at the number and Web site address listed above.
Note that if your parents want to apply for a FFEL
PLUS Consolidation Loan, no credit checks are required.
If they want to apply for a Direct PLUS Consolidation
Loan, they are subject to a check for adverse credit
The interest rate for FFEL Consolidation Loans—and
for Direct Consolidation Loans if your consolidation
application is received on or after February 1,
1999—is a fixed rate for the entire time you repay
the loan. This means once you consolidate, your
rate won’t change, regardless of what future rates
might be. The fixed rate is based on the weighted
average of the interest rates on the loans at
the time you consolidate, rounded up to the
nearest one-eighth of a percent. The interest rate
does not exceed 8.25 percent. Before February 1,
1999, Direct Consolidation Loans had variable interest
If you have a FFEL or Direct Stafford Loan made
on or after July 1, 1995, you can reduce your consolidation
rate by up to half a percentage point or more if
you can consolidate before the end of your grace
Yes, there could be. Keep in mind that consolidation
significantly increases the total cost of repaying
your loans. You might have a longer period of time
to repay a consolidation loan, but you’ll make more
payments and pay more interest. In fact, consolidation
can double total interest expense. So, compare the
cost of repaying your unconsolidated loans with
the cost of repaying a consolidation loan.
You should also take into account whether you lose
any borrower benefits offered under non-consolidated
repayment plans, such as interest rate discounts
or principal rebates, which can significantly reduce
the cost of repaying your loans. Also, you might
lose some discharge (cancellation) benefits if you
include a Federal Perkins Loan in a FFEL Consolidation
Loan or Direct Consolidation Loan.
Once made, consolidation loans can’t be unmade because
the loans that were consolidated have been paid
off and no longer exist. Take the time to study
your consolidation options before you apply.