Q: What are student loan consolidation programs?

A: If you applied for multiple student loans when you when to college, you may have several different loans and may owe multiple creditors. Consolidation enables you to combine several student loans into one new loan. Rather than sending multiple checks to multiple lenders, you can send one check to one lender. You may also be able to reduce your interest rate, extend the life of your loan or lower your monthly payments when you consolidate.

Q: What types of student loans can be consolidated?

A: While you may have multiple student loans, it is important to remember there are two major types of student loans, government loans and private loans. Government loans can consolidated with other government loans, and private loans may be consolidated with other private loans. However, government loans and private loans cannot be consolidated together.

Q: What types of federal student loans can be consolidated?

A: Direct Loans, Stafford Loans, PLUS Loans, Perkins Loans, Guaranteed Student Loans, Federal Insured Student Loans, Supplemental Loans for Students, Auxiliary Loans to Assist Students, National Direct Student Loans, National Defense Student Loans, Health Education Assistance Loans, Health Professions Student Loans, Loans for Disadvantaged Students and Nursing Student Loans are all eligible for a Federal Consolidation Loan.

Q: Who sets the interest rate and other terms on Federal Consolidation Loans?

A: Most of the major terms are set by the federal government.

Q: If the federal government sets all of the major terms, does it matter where I get a federal consolidation loan? Aren’t all student loan consolidation programs created equal?

A: While the government sets the major terms of student loan consolidation programs, individual lenders are authorized to reduce a borrower’s interest rates in certain circumstances. For example, some lenders may reduce your interest rate if you consistently pay on-time, or if you pay electronically. Borrowers should shop around to find a student loan consolidation program that best befits them.

Q: Do I have to consolidate my student loan from the same lender that originated my student loans?

A: No, under federal law, you can consolidate your student loan from any approved lender, whether you are a previous borrow or not.

Q: I already consolidated my loan. Can I consolidate it again to get a lower interest rate?

A: No, you can only consolidate your student loans once. You can only re-consolidate if you have acquired additional student loans since consolidating your existing loans.

Q: What is the specific payback term of a consolidation loan?

A: The repayment term can range from 10 to 30 years, depending on the total amount owed, and what repayment options you chose.

Q: Can I pre-pay my federal consolidation loan?

A: Yes, in most cases you can make a payment early, and in most cases, there is no penalty for early repayment. Borrows should double check with their individual lender before making early payments.