Federal Consolidation Loans
Loan consolidation is a way to combine your existing federal student loans into one new loan, reducing the number of monthly bills and possibly lowering your monthly payment.
Federal Direct Consolidation Loan FAQ's
A Federal Consolidation Loan (FCL) offers eligible borrowers the opportunity to refinance all or some of their outstanding educational loans into a single new loan.
- Subsidized and Unsubsidized Federal Direct (Stafford) Loans
- Federal Perkins Loans
- Federal Graduate PLUS Loans
- Federal Parent PLUS Loans (although, you may not consolidate your parent's PLUS loan with your own)
- Federal Consolidation Loans
- Contact your lender for more information if you have other Federal loans.
The Federal Consolidation loan interest rate is a fixed rate equal to the weighted-average of the interest rates of the loans being consolidated rounded up to the nearest 0.125%. Note: For loans with a first disbursement on or after Jul1, 2013, the 8.25% cap has been eliminated.
Consolidation can significantly increase your total interest costs, because you'll be making smaller installments over a longer time. Depending upon the loan balance and interest rate, consolidation can double or triple your total interest expenses. It is advisable to accelerate payments whenever possible. If you consolidate a Federal Perkins Loan, you will not be eligible for any Perkins Loan cancellation benefits. See our Loan Repayment page for more information on loan cancellation programs.
You may be the target of marketing efforts by many student loan consolidation companies. Unfortunately, not all companies offering consolidation are credible. Some may inaccurately portray themselves as the only lenders to offer consolidation loans or make promises that seem too good to be true. Therefore, it is a good idea to research the lender you choose to consolidate your student loans.