How Federal Student Loan Consolidation Works
Overview of Federal Student Loan Consolidation :
Federal student loan consolidation is a program for students and former students that are carry federal student loan debt. The program allows borrowers of any federal student loan including Perkins, Stafford, Direct Subsidized or Direct Unsubsidized Loans to consolidate their federal student loans. The consolidation of federal student loans means all your loans are included in one payment and usually extends the repayment over a longer period of time—sometimes 20-25 years.
Choosing the Right Time for Federal Student Loans Consolidation
While there is no deadline for applying for federal student loans consolidation, you may want to consider a few important factors first:
- You are not eligible unless you are within the grace period or already in a repayment schedule on each loan you choose to consolidate.
- Repayment includes any student loans that are currently in deferment status or forbearance.
- At the end of the grace period of approved deferment you will pay a higher rate of interest based on a weighted average fixed rate. This means your federal student loan consolidation rate will be higher after this period of time.
Which Loans Are Eligible for the Federal Student Loan Consolidation Program?
Provided all loans are for the same person, any of the below loans are eligible for the federal student loan consolidation program:
- FFELP loans
- Direct loans
- Perkins loans
- Federal Insured Student Loan (FISL)
- Loans for Disadvantaged Students (LDS)
- Nursing Student loans (NSL)
- Health Professions Student Loans (HPSL)
If all of this information sounds overwhelming and/or confusing, you want to remember that consolidating federal student loans can be a daunting task. However, if you choose a company such as Credit-Yogi to help you with the process, it will go much smoother. With experience in the process of federal government student loan consolidation along with other aspects of the student loan process, you will discover the process moves along much smoother.
Benefits of Federal Student Consolidation Loan
A federal student consolidation loan offers a number of benefits including the following:
- One single monthly payment that is lower than what you were or would be paying on individual loans
- Easier loan management because qualifying loans are with one lender
- Ability to consolidate your graduate and undergraduate loans
- Easy to fill out the online application
- No pre-payment penalty
- No fees associated with consolidated federal student loans
- Offers the options of deferment and forbearance
- Extended periods of repayment
- A federal student consolidation loan is eligible for the interest deduction for educational loans as long as students meet the income eligibility requirements as defined by the IRS
- The lower monthly payment provides more disposable income
The experts at Credit Yogi are there to help you consolidate federal student loans at a lower interest rate. We can walk you through the process so you full understand what to expect.
Why should you consider a Federal direct student loan consolidation (or another type of student consolidation)?
Borrowers who have variable rate Federal loans may find right after graduation is the best time to consolidate their student loans. This method provides the best possible federal student loan consolidation interest rate.
Is there another reason a borrower might want to consolidate a student loan?
Consolidating student loans extends the repayment terms and provides other discounts as well.
Who is Eligible for Federal Student Loan Consolidation?
You must have at least one federal student loan to qualify for consolidation. In addition borrowers must also:
- Be gainfully employed
- Have some type of collateral
- Have a co-signor
For more information on qualifying, you can fill out the short form and speak to one of our student loan experts.