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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

What is a Federal Consolidation loan?

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.

Which federal loans can I consolidate? (Private loans cannot be combined with federal loans.)
What will be my interest rate?

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.

Are there any disadvantages to loan consolidation?

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.

Will I lose my grace period?
As a result of recently implemented improvements to the Federal Direct Consolidation Loan process, you may now delay the consolidation of any loans that are in the grace period by indicating the grace period end date on the Federal Direct Consolidation Loan Application and Promissory Note. Access StudentLoans.gov for more information and the application.
What about the mail and phone calls I get from lenders promising lower rates?

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.