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Frequently Asked Questions

1. What are the benefits of a Federal Student Loan Consolidation?

Federal Student Loan Consolidation allows borrowers to combine one or more of their Federal education loans into a new loan that offers several advantages.

One Lender and One Monthly Payment

With only one lender and one monthly bill, it is easier than ever for borrowers to manage their debt. Borrowers have only one lender, the U.S. Department of Education, for all loans included in a federal student loan consolidation.

Flexible Repayment Options

Borrowers can choose from multiple plans to repay their federal student loans, including an Income Contingent Repayment Plan. These plans are designed to be flexible to meet the different and changing needs of borrowers. With a Federal Student Loan Consolidation, borrowers can switch repayment plans at anytime.

No Minimum or Maximum Loan Amounts or Fees

There is no minimum amount required to qualify for a Federal Student Loan Consolidation.

2. Can I consolidate my loans if I am enrolled in school?

Yes and No. Borrowers who are enrolled in school cannot consolidate loans that are in an in-school status. These are loans that have not yet been entered or used up the 6-month grace period entitlement.

Borrowers still can consolidate loans that are in grace, repayment or deferment

3. What special conditions apply if I am in repayment and just consolidating now?

Borrowers in repayment who want to consolidate their Federal education loans should continue making payments until their loan holder notifies them that their loans are paid in full.

4. Can I consolidate jointly with my spouse?

No, Effective July, 1 2006 a married couple may no longer obtain a Federal Student Loan Consolidation as joint borrowers.

5.What are the consequences of defaulting?

Borrowers who fail to make a payment on time are considered delinquent on their consolidation. Borrowers who do not make payments for 270 days are in default. Defaulting has severe and long-lasting consequences, as follows:

  • The Department of Education can immediately demand repayment of the total loan amount due. The Department of Education will attempt to collect the debt and may charge collection costs.
  • The Department of Education reports defaulted loans to national credit bureaus, damaging borrowers’
  • credit ratings and, making it difficult for borrowers to make purchases such as cars or homes. Borrowers with loans in default are ineligible for Title IV student aid.
  • Borrowers with loans in default are ineligible for deferments
  • The Internal Revenue Service can withhold borrowers’ Federal income tax refunds.
  • Borrowers’ wages may be garnished

6. How long does it take to consolidate my loans once I submit my application?

The consolidation process generally takes 60-90 days from the date your student loans are filed for consolidation.

7. When can I expect my first monthly payment to be due?

Borrowers will receive an initial billing statement from the D.O.E within 60 days of the first disbursement of their loans being consolidated. Payments are due monthly.

8. When can I consolidate my loans?

Generally, you are eligible to consolidate after you graduate, leave school, or drop below half-time enrollment.

9. What is the interest rate on a consolidation loan?

A Federal Student Loan Consolidation has a fixed interest rate for the life of the loan. The fixed rate is based on the weighted average of the interest rates on the loans being consolidated, rounded up to the nearest one-eighth of 1%. However, the rate will not exceed 8.25%.

10. Who can consolidate?

Both student and parent borrowers can consolidate their education loans. (Students and parents cannot combine their loans through consolidation, since only loans from the same borrower can be consolidated. But they can consolidate their loans separately.)

11. Does consolidation affect my credit rating?

No. Education debt is considered “good debt”, as it represents an investment that generally increases your ability to earn money to repay debt. Even though consolidation may increase the term of the loan, it does not appreciably change repayment behavior. (Defaulting on your education loans, on the other hand, will negatively impact your credit rating.)

12. I have just one loan. Can I consolidate?

Yes, so long as the loan being consolidated is not itself a consolidation loan. To reconsolidate a consolidation loan, you must include additional loans. Otherwise, you can consolidate even just a single loan.

13. What is a FASFA pin?

A PIN is a 4-digit number that is used in combination with your Social Security Number, name, and date of birth to identify you as someone who has the right to access your own personal information regarding your federal student loans.