Student Loan Consolidation
Student Loan Consolidation - What types of Student Loans
Can I Consolidate?
Student Loan Consolidation - What types of Student Loans
Can't I Consolidate?
Student Loan Consolidation - Are You Eligible for
Student Loan Information - Learn About the Financial Aid Process
Student Loan Debt Consolidation Advice
1)        STUDENT LOAN RATES for 2009 - 2010
Student loan rates are linked to the 91-day Treasury bill auction to determine
their interest rates. The student loan interest rate holds from July 1 through
June 30 each year. Currently, Stafford loan rates have an interest rate cap of

Period (includes loans in school, grace, deferment and repayment periods)     
     Fixed Rate
Federal Stafford Loan Rates - Undergrad Subsidized
Loans first disbursed between 07/01/2008 and 06/30/2009         6.00%
Loans first disbursed between 07/01/2009 and 06/30/2010         5.60%
Loans first disbursed between 07/01/2010 and 06/30/2011         4.50%
Loans first disbursed between 07/01/2011 and 06/30/2012         3.40%

Stafford Loan Rates for loans disbursed July 1, 1998, and June 30,
2006 -
Effective July 1st, 2009 the student loan rate is now 2.48% for actively repaid
loans disbursed between July 1, 1998, and June 30, 2006

Federal Student PLUS Loan Rates -
The interest rates on PLUS loans is now 8.5% (fixed) for loans disbursed after
June 30th 2008. For loans disbursed between July 1, 1998, and June 30,
2006 it is 3.28%. The 3.28% rate includes loans in repayment,  forbearance
and deferment phases.

In a time when interest rates are falling, you should wait until after July first to
make the consolidation decision. Interest rates may go down for the following
year and, depending upon the new rate for your loan, can affect your
decision to take out a consolidation loan. This has not been the case
recently, as interest rates have been trending up due to the fed raising the
discount rate to curb inflation.

2)        Important Note: A lender sometimes takes up to a month to complete a
loan application.  If they do not confirm the loan by June 30, borrowers will
pay next year's rate on their consolidated loan, no matter if the rate goes
down, or up. In the past there was a grace period that allowed student loan
borrowers to receive the previous year's interest rate, as long as their
application was submitted by the deadline. This is changing because the U.S.
Congress passed the 2005 Budget Reconciliation Act last year. That piece of
legislation effectively eliminates the student loan grace period. So, time your
consolidation loan application carefully.

3)        Married couples - Think twice before getting a consolidation loan as a
married couple, rather than as an individual. Some loan consolidators will
strongly advise debtors to take this route because the loan balance will be
greater. However, if a couple co-signs, both parties are responsible for the
loan. They will be both liable for repayment of the loan, even if they later
divorce.  Student loans are forgiven upon the death of the borrower.
However, in the case of a joint consolidation loan, both parties must be
deceased in order to escape responsibility for repayment of the loan.

4)        Good News! - No, we haven switched our car insurance! Student loan
consolidation differs from consumer loan consolidation in that when
consolidating student loans, you can avoid much of the dirty work, such as
credit checks. These aren't required for student loan consolidation. Let's say
that again - No Credit Checks are Required for Student Loan Consolidation!

5)        You're required by government regulation to consolidate the lender
that holds your loans if you got all your student loans from the same lender.
Some lenders do not offer the consolidation option. In that situation, you may
look at other lenders. Look carefully! Check with your school's financial office
first. They are a great resource for this.

6)         Some lenders offer an interest rate reduction if you pay your loan
payments electronically.  It may be only a 1/4 point, but bears checking out.
Some loans will allow an even greater reduction after a few years of on-time

7)         If you consolidate your student loan during your grace period, your
loan will be at a 0.6% lower interest rate. You may, however, lose the rest of
your grace period after you consolidate. During the grace period, the federal
government picks up the tab for the interest on any federally subsidized loans.
  • Direct PLUS Loans and Federal PLUS Loans
  • Direct Consolidation Loans and Federal Consolidation Loans
  • Federal Insured Student Loans
  • Federal Supplemental Loans for Students
  • Auxiliary Loans to Assist Students
  • National Direct Student Loans
  • National Defense Student Loans
  • Direct Subsidized and Unsubsidized Loans
  • Guaranteed Student Loans (GSL)
  • Federal Perkins Loans
  • Federal Subsidized and Unsubsidized Federal Stafford Loans
You can't consolidate some types of student loans. However, just because
you can't include these loans in a Direct Consolidation Loan, you can
consider these loans in the calculation of your maximum repayment period
under the Graduated or Extended Repayment Plan. These include but are
not limited to the following:

  • Any student loans not guaranteed by the federal government
  • Medical Assist Loans
  • Primary Care Loans
  • Law Access Loans
  • PLATO Loans
Consolidate Your Debt -
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Are you even eligible to lower your payment through loan consolidation?
You must first answer a few simple questions. The following apply to
students wishing to consolidate Federal Direct student loans.
  1. Are you currently a student? If you are a student, are you attending a
    Direct Loan institution?
  2. Do you currently have at least one Direct Loan or FFEL in an in-
    school period?

    If you are not a student at a Federal Direct Loan institution,  do you
    currently have at least one Direct Loan and can you include at least
    one Direct Loan or FFEL in an in-school period?

If you can answer "yes" to these questions, you are most likely eligible to
consolidate your Federal Direct Student Loan.

If you are no longer a student you must be able to include at least one
Direct Loan in your loan consolidation, or include one FFEL and have been
unable to obtain a Federal Consolidation Loan with a FFEL consolidation
lender or can not obtain a Federal Consolidation Loan with income-sensitive
repayment terms you find acceptable.
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