Consolidating federal graduate loans
Under the Direct Loan Consolidation Program, you can consolidate Subsidized and Unsubsidized Stafford Loans, Supplemental Loans for Students (SLSs), Federally Insured Student Loans (FISLs), PLUS Loans, Direct Loans, Perkins Loans, Health Education Assistance Loans (HEALs), and just about any other type of federal student loan.
Loans that are not eligible for consolidation include state or private loans that are not federally guaranteed.
You can indicate this when you apply, and the consolidation servicer will wait to process your application until the appropriate time.
APPLYING FOR DIRECT LOAN CONSOLIDATION The Department generally requires all borrowers to apply for Direct Loan consolidation using the web site. It is very important to review this sheet and check to make sure all of the loans you wanted to consolidate are included in the new consolidation loan.
Further, borrowers with joint FFEL consolidation loans, according to the Department, may not reconsolidate into Direct Loans and therefore are not eligible for public service loan forgiveness. The fixed rate is based on the weighted average of the interest rates on the loans at the time of consolidation, rounded up to the nearest one-eighth of a percentage point.
The interest rate must not exceed 8.25% for consolidation loans prior to July 2013.
Consolidating federal student loans may be a good strategy to lower monthly payments or to get out of default, but it is not always a good idea.
As you weigh the pros and cons, keep in mind that timing is critical.
Consolidating student loans via refinancing is best for people whose financial position - in terms of employment, cash flow, and credit - has improved since they graduated from school.(Click espanol to find a Spanish version of the on-line application). Be sure to meet the deadline for responding if you think there are problems with the consolidation or if you have decided you do not want to go forward.