FAQ Contents
What are the benefits of federal consolidation loans?
Federal Consolidation allows borrowers (parents or students) to lock in today's low rates and to combine several federal student loans into one loan, simplifying repayment. Because repayment can be spread over a longer time period, your monthly payment amount will likely be lower. With our Student Loan Consolidation program, you can reduce your interest rate by an additional 1.50% with our borrower benefits plan - Click Here for Savings Details. Why consolidate your student loans with us?A few very simple reasons:
Who is eligible for student loan consolidation?You must have more than $10,000 in outstanding federal student loans. Want to find out if you are eligible? Request a free, no-obligation information packet and we can confirm your eligibility. Here are the things that are not required:
What is the interest rate?Click here for updated information about projected loan rates! The rate will be a fixed rate equal to a weighted average of the interest rates on your existing loans rounded up to the nearest one-eighth of one percent. Currently, rates are set to the following starting points:
These rates are starting points and do not represent the final, lower rates you would receive with any applicable discounts. Consolidations done during the loan "grace" period will be based on a weighted average of the in-school interest rates, which are generally lower. Use our Loan Calculator to help you figure out your new rate and monthly payment. Please note that we cannot guarantee any interest rate due to the time it takes to process an application. We can only provide rough estimates; you should not rely on these estimates for financial planning! Why? Because consolidation takes between 30 - 60 days, and in that time period, you may be making payments, or your loan status may change. Because your interest rate is determined not only on the type of loan you have, but also on how much you owe, we can make no guarantee except to say that your interest rates will never exceed federally specified, published rates. Why consolidate in my grace period?If you are in your six-month post-graduation grace period, you can apply for and receive additional savings. During this six months, Stafford loans disbursed before July 1, 2006 have a 0.6% lower rate. By consolidating during this period, you are able to lock in this discounted rate. If you wait until your grace period is over your rate will increase by 0.6%. Your application must be received in our office before your grace period ends in order to obtain the additional 0.6% discounted rate. When you fill out your consolidation application, be sure to include your grace period end date, and we will complete your consolidation when your grace period expires. If you need assistance determining this date. How do I qualify for the 5.1% advertised?You need to have:
The 5.1% is based on a 6.543% Stafford Loan rate, which rounds up to 6.625%. Take advantage of both discounts (0.50% off for automatic checking account withdrawal and 1% after 3 years of successive on-time payments for loan totals over $20,000) and at the end of 3 years, your effective rate will be 5.1%. How do the discounts work?Discounts remove time off your loan. Your monthly payment does not change, but the overall time you pay does. For loans over $20,000, if you take advantage of both discounts, on average you will save:
The 0.50% automatic debit discount is permanent as long as you continue to use the program. The 1% discount for the first 24 consecutive on time payments is effective after 24 months. What types of loans may be consolidated?
What about consolidating with my spouse?Spousal consolidation is no longer permitted. Sorry. I consolidated in the past, can I do it again?It depends. Consolidation is the combination of many loans into one. If you have consolidated in the past with someone other than the US Department of Education, you can't do it again unless:
How is the consolidation loan repaid?The first payment is due no more than 60 days from the date the Consolidation loan is disbursed. Repayment schedule choices include:
Are there any fees to consolidate?No, there are no fees to consolidate federal student loans. Is there a credit check required to consolidate?No, there is no credit check, because your federal student loans are guaranteed by the US Government. However, consolidation will improve your credit rating! Click here to find out how. Are there any early payment/repayment fees or penalties?No, there are no early repayment penalties for a student loan consolidation. The government wants its money back. To make extra payments, consolidate now, and then when your payment schedule begins, simply specify "Extra payment to principal" on your early payments. Did you know that early repayments are interest-free? It's true! Every dollar beyond your required monthly payment is paid towards the principal - it's like an interest-free payment! How do I apply for a Consolidation loan?Loan Counselors are available to assist you with the application process. We can help you complete the necessary forms accurately. We make everything as simple as possible. There are three easy ways to apply!
Do I continue making loan payments while my consolidation application is in process?Yes! Until you are notified that your loans have been paid off through the consolidation process, you should continue to make your student loan repayments. Since consolidation can take anywhere from 30 - 90 days, it's important that you don't fall behind on payments. Once your consolidation is complete, we will send you a new repayment schedule, with your new monthly payment and due date. How long does a consolidation take?Consolidation can take anywhere from 30 to 90 days; in rare cases it may take longer. The reason this takes as long as it does is that we retrieve payoff statements (called LVCs - Loan Verification Certificates) from your lenders. Some lenders are more cooperative than others. Do you sell your loans?There may be certain circumstances under which loans will be sold. However, if a consolidation loan is sold for any reason, you keep all your borrower benefits (discounts), and you don't need to complete any additional paperwork. What do I do if I am not eligible to consolidate?If you've previously consolidated, have loans with just one lender, loans totaling less than $7,500, or other conditions which prohibit you from consolidating your Federal Student Loans with us, there are a few options you can pursue:
Can I defer or forbear?Yes! One of the greatest benefits of federal student loan consolidation is that you retain all your federal borrowing privileges, such as:
How do you defer? Once you consolidate, you will receive paperwork for your payment schedule. At that time, you can request a deferment or forbearance form. Did you know that your deferment and forbearance clock resets when you consolidate? It's true! If you've already used part of a deferment or forbearance on your existing federal student loans, when you consolidate, it's essentially a new loan, so your deferment and forbearance clocks reset, giving you a clean start! Are you a government or private agency?StudentLoanConsolidator.com is a private company and a member of the Student Loan Network. Our federal student loan consolidation program is backed by the Education Lending Servicing Center and underwritten by Fifth Third Bank, founded in 1858. Our federal student loan consolidation program is part of the Family Federal Education Loan Program (FFELP), which is overseen and managed by the US Department of Education. Click here to read more about us. Why do student loan rates change?See our page on the relationship between student loans and Treasury bills! Why Consolidate?The very best time to consolidate your student loans is immediately after graduating, before your grace period ends. Doing so allows you to lock in the lowest possible interest rate on your loans. Consolidating is a great option whenever you want to increase your monthly cash flow - by consolidating, you extend your repayment term and get additional discounts on your existing rates, which reduces the monthly payment you make. Consolidating now is a great time, because interest rates are projected to continue rising, so consolidate your student loans right now! Repayment GuidelinesDepending on the total amount of your consolidation loan, the government has set the following repayment periods:
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