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Loan Consolidation

Consolidation Loans combine several student loans into one bigger loan from a single lender, which is then used to pay off the balances on the other loans. If you already have FFEL Program loans and will now be receiving Direct Loans, consolidating your FFEL and Direct Loan program loans together into a Direct Consolidation loan may make loan repayment easier. If you consolidate, you will have just a single monthly payment. Consolidating your FFEL Program loans into a Direct Consolidation Loan may also allow you to take advantage of certain benefits that are offered only in the Direct Loan Program, such as Public Service Loan Forgiveness and the Income Contingent Repayment Plan.

  • Consolidation can be VERY important for students who have federal loans that were lent by a private bank. These loans are called Federal Education Loans or FFEL loans. Why? Because FFEL loans do NOT qualify for the federal government's new Public Service Loan Repayment (PSLF) program. Students would need to consolidate these FFEL loans into the Direct Loan program to take advantage of this forgiveness program. To determine if you have a FFEL loan, please login to and review each loan. Loans that are labeled as "Direct" are in the Direct Loan program whereas loans labled as "FFEL" are in the Federal Education Loan Program.
  • For all Direct stafford and grad PLUS loans taken out by the student, if those loans are with one loan servicer (visit and review the information listed as "ED Servicer" for each of your loans) the student should have one payment- no need to consolidate.
  • Married couples can no longer consolidate their federal loans together.

    However, a married couple who file a joint tax return, both owe student loans balances and qualify can get a combined IBR payment plan. This is not the same thing as a spousal consolidation. Payment plans can be changed at any time, so if a couple in a combined IBR plan no longer qualify, each can each chose a different payment plan for his/her loans. In the situation where qualifying couples choose a combined IBR plan - the underlying loans remain open in the original borrower's name and received payments are prorated among all loans in the plan. "Spousal consolidation ended for applications received by a lender on or after July 1, 2006."
  • Students cannot consolidate a private education loan with their federal loans.
  • When Does Repayment Begin on a Consolidation Loan? Repayment on a consolidation loan will begin within 60 days of disbursement of the loan, unless the borrower qualifies for a deferment or forbearance. Consolidation loans, like all federal education loans, do not have a prepayment penalty, so consolidation loans can be paid aggressively to save time and money.
  • Interest Rates for Consolidation Loans - The interest rate for Direct Consolidation Loans is fixed for the life of the loan and is based on the weighted average of the interest rates of the loans being consolidated
  • Cost to consolidate- there are no direct fees to consolidate your loans but you could lose some borrower benefits from your current loans, the new consolidated weighted average interest rate is rounding higher to the nearest 1/8 percent, and your new consolidated loan will captalize any outstanding interest all of which could be considered a cost.
  • Students can consolidate their loans in grace and while in repayment- not while in school.

    General information about Direct Consolidation Loans is available on the Website. Once your loans are combined into a Direct Consolidation Loan, they cannot be removed. The loans that were consolidated are paid off and no longer exist.

    To learn more about when you may consolidate, the pros and cons of doing so, and the application process, visit or call 800/557-7392 (TDD/TTY: 800/557-7395).
  • AAMC Loan Consolidation Primer

This primer is designed to help medical school borrowers determine if loan consolidation is an option they should pursue. It is written primarily for residents, but might also prove beneficial for currently enrolled medical students who have questions about loan consolidation. For more information, visit

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