Federal Student Loan Consolidation

After graduation, many students have a series of student loans (and payments), through the Stafford, PLUS, or Perkins loan programs. When you consolidate federal student loans into one single loan you realize a reduced monthly payment (up to 53% less), a longer repayment term, and a fixed interest rate. Also, any deferment or forbearance time that you have used will be renewed.

In addition to significantly reducing your monthly payments, student loan consolidation can lower your debt-to-income ratio and improve your credit score. Consolidation allows you to stretch your repayment period from the standard 10 years to up to 30 years, depending on the total amount of the student loans you are consolidating. The lower monthly payment means you will have more money available to meet other living expenses, including car payments, housing expenses, and career-related necessities. There are no prepayment penalties, so even though your student loan term is longer, you can still pay it off as quickly as you like.

Federal Student Loan Consolidation Eligibility

Anyone who took out federal student loans while attending college may be eligible for Federal Student Loan Consolidation. This includes Federal Stafford Loans , Federal Graduate Stafford Loans , Federal Parent PLUS Loans , Federal Graduate PLUS Loans , Federal Direct Loans, and Perkins Loans. Eligibility requirements include:

• Loans must not be in default
  • You may be able to consolidate, with help from College Spot, if you have defaulted student loans
• Borrower must have graduated or be enrolled less than half-time
• Minimum federal student loan amount requirement (varies by lender)
• Borrower must not have previously consolidated federal student loans
  • If you consolidated previously, you must have a new federal loan to add to a new consolidation

If you have private student loans then check out our section on Private Student Loan Consolidation.

Federal Student Loan Consolidation Interest Rates

The interest rate on your federal consolidation loan will be a fixed rate that is a weighted average of the interest rates on your underlying loans that are included in the consolidation loan.

Federal Student Loan Consolidation Fees

There are no fees associated with consolidating your federal student loans.

Federal Student Loan Consolidation Repayment Options

The standard repayment term for a Federal Consolidation Loan is 10 to 30 years, depending on the total amount of the student loans you are consolidating.

You can choose one of the following plans:

• The Standard Repayment Plan (or Level Repayment Plan) requires you to pay a fixed amount each month based on your principle and interest but will be no less than $50 or the interest that has accrued.
• The Graduated Repayment Plan allows you to make lower payments at the beginning of repayment then, over time, your payments begin to increase. Each of your payments must equal the interest accrued on the loan between scheduled payments. Initial payments generally cover “interest-only” for the first few years. There are different types of graduated plans, so check with your lender on what is available.
• The Income-Sensitive Repayment Plan bases your monthly payment on your yearly income and your loan amount. Payments may change as your income rises or falls.