Consolidating federal student loans department education Ageplay video chat
If you currently have multiple federal student loans and want to simplify repayment, you may be eligible for the Federal Direct Consolidation Loan.
In addition to lower payments, a federal loan consolidation may open access to income-driven repayment and loan forgiveness plans.
Our company may receive compensation from partners seen on our website. If that sounds familiar, you’re likely searching for a way to simplify repayment, and consolidating student loans may be a solution.
A consolidation loan is a single loan that is used to pay off an existing set of loans, resulting in one monthly payment and a single interest rate.
Since repayment is typically extended and the new rate is a weighted average of all loans included in the consolidation, borrowers may find that they will make more payments and pay more in interest.
If you’re thinking about consolidating your federal loans, here are a few things to keep in mind.
Most federal loans are eligible for consolidation as long as they are in repayment or in a grace period; however, the consolidation must include at least one Direct Loan or FFEL Program loan.
Additionally, consolidation through the Direct Consolidation Loan may result in the loss of existing borrower benefits and repayment options, including principal rebates, interest rate discounts, and loan forgiveness benefits associated with the existing loans.
This is particularly true for borrowers who have already enrolled in income-driven repayment plans or a forgiveness plan, as consolidation will “reset the clock,” essentially extending repayment.