Federal Student Loan Consolidation

2011 Update

• Beginning July 1, 2010 all federal student loans (Stafford, PLUS and consolidation loans) are provided only by the US government through what is called the "Direct Loan Program."
• All lending from the bank-based Federal Family Education Loan Program (FFELP) will be transferred to the Direct Loan Program. Private banks will no longer lend government-backed loans to students.
• Every student applying for federal student loans will do so through their college or university (contact your Financial Aid office to learn how).
• Between July 1st, 2010 and June 30th, 2011 students still in school who have multiple federal loans can consolidate those loans in to the Direct Loan program (a single federal loan through the US government)

A Consolidation Loan allows you to combine all the eligible federal student loans you received to finance your college education into a single loan. Consolidation can significantly lower your monthly payment, offers the security of a fixed interest, and extend the repayment time to up to 30 years, and provides the convenience of making one single payment each month. However, with the extended term, you might pay more interest over the life of the loan(s). Since there are no pre-payment penalties, many borrowers prefer the lower payments when starting out in their careers and then make larger payments later as their incomes increase to minimize the overall interest costs.

Visit the Department of Education's consolidation loan page to apply for student loan consolidation.

Most federal education loans are eligible for consolidation, including subsidized and unsubsidized Direct and FFEL Stafford Loans, SLS, Federal Perkins Loans, Federal Nursing Loans, and Health Education Assistance Loans. Private education loans are not eligible. PLUS Loan borrowers (parent borrowers) also can consolidate their loans.