Notice: From January 1st through June 30, 2012, the Department of Education is offering a short-term consolidation opportunity–Special Direct
Only certain borrowers are eligible for Special Direct Consolidation Loans. One of the Department of Education’s federal loan servicers will be contacting eligible borrowers. In order to be eligible, you must have at least one loan owned by the Department of Education and at least one commercially held FFEL loan. For more information see: Special Direct Consolidation Loans.
As of July 1, 2010, all federal student loans (Stafford, PLUS and consolidation loans) are provided only by the US government through the “Direct Loan Program.” All lending from the bank-based Federal Family Education Loan Program (FFELP) has been transferred to the Direct Loan Program. Private banks no longer lend government-backed loans to students.
Any student wishing to apply for federal student loans will do so through their college or university (contact your Financial Aid office to learn how).
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 rate, and extends the time to repay to up to 30 years. A consolidation loans also 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.