Federal Consolidation

Consolidation loans are used to refinance or pay off existing or “underlying loans.”

They are useful not only for getting all loans in one place for easy payment, but also as a way of locking in interest rates. They were popular years ago for borrowers who needed to extend their repayment term beyond the standard 10 years.

Changes in the student loan industry over the past few years have somewhat lessened the importance of student loan consolidation. These include:

• Stafford and Grad PLUS Loans disbursed on or after July 1, 2006, already carry fixed rates
• Many borrowers already qualify for extended repayment terms beyond 10 years
• Many borrowers are now taking out their loans from one loan provider and taking advantage of combined or single billing (one statement for all their loans)

Recent legislative changes have resulted in many student loan lenders no longer offering loan consolidation, federal or private. Contact your loan provider or your Financial Aid office if you have questions.