• For Defaulted Student Loans
• For Private Student Loan Consolidation
• For Graduates who have received an application in the mail from us, here are some frequently asked questions about your consolidation application.

FAQ Contents

1. What are the benefits of federal consolidation loans?
2. Why consolidate with us?
3. Who is eligible for student loan consolidation?
4. What is the interest rate?
5. How do I qualify for the 3.5% advertised?
6. How do the discounts work?
7. What types of loans may be consolidated?
8. What about private loan consolidation?
9. What about credit cards, car loans, etc.?
10. What about consolidating with my spouse?
11. I consolidated a year ago, can I do it again?
12. How is the consolidation loan repaid?
13. Are there any fees to consolidate?
14. Is there a credit check required to consolidate?
15. Are there any early payment/repayment fees or penalties?
16. How do I apply for a Consolidation loan?
17. Do I continue making loan payments while my consolidation application is in process?
18. How long does a consolidation take?
19. Do you sell your loans?
20. What do I do if I'm not eligible?
21. Can I defer or forbear?
22. Are you a government or private agency?
23. Why do student loan rates change?

What are the benefits of federal consolidation loans?

• Lower your monthly payments
• Flexible repayment terms & conditions
• Improved credit rating
• Lock in low, fixed rates (as low as 3.5%)
• One easy payment - only one check to write each month

Federal Consolidation allows borrowers (parents or students) to lock in today's low rates and to combine several federal student loans to simplify loan repayment. Because repayment can be spread over a longer time period, your monthly payment amount will likely be lower.  With the Consolidator Consolidation Loan, you can reduce your interest rate by an additional 1.25% with our borrower benefits plan - Click Here for Savings Details.

Why consolidate your student loans with us?

A few very simple reasons:

• When you call us, you can reach a consolidation expert with real answers, not get the runaround
• Great borrower benefits!
  • 0.25% off for automatic checking account deduction
  • 1% off after 36 consecutive on-time payments for loans over $20,000 total
  • Other companies require $50,000 or more, or discount after 4 years instead of 3!
• Fast consolidation turnaround - averaging 30 to 60 days instead of the industry standard 120 - 180 days

Read our Shopping Around for Student Loan Consolidation page for more!

Who is eligible for student loan consolidation?

You must have more than $10,000 in outstanding federal student loans, and no longer be in school half time or more. If you have previously consolidated, you can not refinance that loan unless you have new student loans since the previous consolidation, or unless you consolidated directly with the Department of Education.

Want to find out if you are eligible? Request a free, no-obligation information packet or just give us a call ()and we can confirm your eligibility.

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:

• Stafford Loans in grace: 4.7%
• Stafford Loans in repayment: 5.3%
• Stafford Loans in repayment prior to 7/1/98: 6.1%
• PLUS Loans: 6.1%
• Perkins Loans: 5%
• HEAL Loans: 4.125%
• Previous consolidations: existing consolidation rate

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.

How do I qualify for the 3.5% advertised?

You need to have:

• Only Stafford Loans in grace periods
• Make the first 36 payments on time.

The 3.5% is based on a 4.7% Stafford Loan rate, which rounds up to 4.75%. Take advantage of both discounts (0.25% 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 3.5%.

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:

• Almost 3 years on a 20 year loan
• Almost 4 years on a 25 year loan
• Almost 5 years on a 30 year loan

The 0.25% automatic debit discount is permanent as long as you continue to use the program.

The 1% discount for the first 36 on time payments is effective after 36 months and remains in effect as long as payments continue to be made on time. Once a payment is late, the discount is discontinued and cannot be recovered.

What types of loans may be consolidated?

• Stafford Loans - Subsidized and Unsubsidized
• Federal Direct Stafford Loans - Subsidized and Unsubsidized
• HEAL/HPSL Student Loans
• Parent PLUS Loans
• Federal Direct Parent PLUS Loans
• Federal Consolidation Loans
• Federal Direct Consolidation Loans
• Perkins Loans
• Nursing School Loans and more...
• For Private Student Loan Consolidation - Click Here >>
• For Defaulted Student Loan Consolidation

What about private loan consolidation?

It's not a bad idea to consolidate your private student loans. What is a bad idea is combining federal and private student loans, which results in a consolidated private loan. This is bad for many reasons:

1. You cannot defer payments on a private loan consolidation if you want to go back to school. You can with federal loan consolidation.
2. You cannot forbear payments in case of economic hardship on a private loan consolidation.
3. You cannot claim interest as a tax deduction on a private loan consolidation.
4. You cannot apply for forgiveness on a private loan consolidation. Certain types of work, such as federal volunteer programs, teaching in economic development zones, and military service, among others, can qualify you to have part or all of your federal loans dismissed by the government.
5. If you should pass away, private loans are passed to your next of kin. Federal loans are forgiven.
6. Private loan consolidation very often has variable rates, which means you cannot lock in today's current historic low rates. Those rates may be tied to volatile indexes like the Prime Rate, which can jump as high as 13%.

Consolidating your federal student loans first is very important, because in doing so, you reduce the number of open lines of credit (loans) you have. This boosts your credit score, enabling you to obtain better terms for private loan consolidation.

What about credit card consolidation, car loans, etc.?

Unfortunately, you cannot combine non-federal loans of any kind with federal student loans. Why? Because they are different types of loans. Federal student loans are backed by the US Government; if a student doesn't pay their loans, the government pays the lender, and then obtains payment from the student. The lending institutions (typically banks) know that they will always get their money back, which is why they can offer student loans at such low rates compared to other kinds of loans.

Private loans, such as credit cards, car loans, mortgages, etc. are backed by an individual's creditworthiness and collateral. Lending institutions take higher risks in loaning money privately than through the government. The government and the banks will not permit low-risk loans to be combined with high risk loans, and so you cannot consolidate other forms of debt with your federal student loans.

However, consolidate student loans to improve your credit rating, and you may be able to qualify for better interest rates on your private loans when you refinance them.

What about consolidating with my spouse?

A great idea, and perfectly allowable, too. However, you and your spouse must be able to individually qualify for a consolidation.

You and your spouse can consolidate together, making for one easy payment per month. There are two caveats you should be aware of:

1. Should you or your spouse pass away , the portion of the loan held by the deceased is forgiven.
2. Should you divorce, one of you will be responsible for the loan in its entirety.

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:

• You have new loans that were not included in the original consolidation.
• Or, you have multiple consolidations from different lenders.

If you consolidated previously with the Department of Education, you may be eligible for our Right Rate Reconsolidation program. Learn more about it here.

Call us toll-free with questions!

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:

• Standard payments (fixed monthly payments over a fixed time)
• Graduated payments (payments which gradually increase over the years)
• Income-Sensitive payments (variable payment amounts based upon annual income) and
• Extended payments (more than $30,000 over a 25 year period or more than $60,000 over a 30 year period).

Are there any fees to consolidate?

No, there are never any 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?

Definitely not . 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!

1. Apply online using our super-fast consolidation form!
2. Apply by mail - simply download, print, and mail your application to us!
3. Apply by phone - call us today toll-free at !

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. 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 60 days; in rare cases it may take longer (if, for example, you had 30 or 40 loans). 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?

Generally speaking, no. There may be certain circumstances under which loans will be sold, such as cases when payments are repeatedly past due or loans go into default. However, if a consolidation loan is sold for any reason, you keep all your borrower benefits (discounts).

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:

• Consider refinancing a home or investment property to pay off the loan. If you've previously consolidated at high rates, using this option will give you tax benefits and still be cheaper than the rates you are paying now. Visit our Mortgage Center for more information.
• Consider a personal line of credit from your bank or credit union.
• Consider a private loan consolidation.

Can I defer or forbear?

In a word, yes! One of the greatest benefits of federal student loan consolidation is that you retain all your federal borrowing privileges, such as:

• Deferment of your consolidation payments when you return to school
• Forbearance of your consolidation for up to 36 months without losing borrower benefits
• Forgiveness of your entire loan if you pass away

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.

To get forms, click here!

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 at a 39 year low. As of July 1, they're likely to go up, possibly by quite a bit, so consolidate your student loans right now!

Repayment Guidelines

Depending on the total amount of your consolidation loan, the government has set the following repayment periods: