Federal Student Loan Consolidation: FAQ Part 1

If you are considering federal student loan consolidation as a financial aid option, here are some commonly asked questions about this student loan program. Some of these questions have been covered in my other posts on student loan consolidation, and others have not.

1. What are the benefits of federal consolidation loans?
A few of the main benefits include reducing your monthly payment by up to over 50%, simplifying your finances (only make one payment each month), a variety of budget-friendly repayment options, an opportunity to improve your credit rating, and the ability to save money when you need it the most.

Since the interest rates are also fixed, federal student loan consolidation allows borrowers (whether it is a parent or student) to be guaranteed today’s interest rates, even if they rise in the future.

2. Can non-student loan debt be consolidated with the student loans?
If you have debt other than student loans (i.e. credit card debt, personal loan debt, etc.), you will have to consolidate it separately from your federal student loans.

3. What are some common requirements for FFELP student loan consolidation?
Since FFELP student loan consolidation is done through private lenders (although it is still a federal student loan), you will often be required to have borrowed a certain amount in student loans to be eligible for student loan consolidation. You can also not be in default and not be in school more than half time for the student loans to be consolidated (since you cannot consolidate until you graduate).

4. Do I need to be employed to be eligible for federal student loan consolidation?
No.

5. Do I require any collateral or a cosigner to be eligible for federal student loan consolidation?
No, you do not need a cosigner or any kind of collateral.

6. What is the interest rate?
The interest rate of federal student consolidation loans (both FFELP and Direct) will be the weighted average of the interest rates on your existing student loans rounded up to the nearest one-eighth of a percent.

7. What types of student loans may be consolidated?

-Stafford Loans (both subsidized and unsubsidized)

-Federal Direct Stafford Loans (both subsidized and unsubsidized)

-HEAL/HPSL Student Loans

-Parent PLUS Loans

-Federal Consolidation Loans (to reconsolidate, you must be adding additional federal student loans)

-Federal Direct Parent PLUS Loans

-Federal Direct Consolidation Loans (must add additional federal student loans to be eligible)

-Perkins Loans

-Nursing School Loans

-Any other government student loans that you may have attained.