Consolidation of Federal Loans
Consolidating (or, “combining”) your federal student loans into one loan is advantageous in that you will have the convenience of making a single monthly payment. To qualify for a Federal Consolidation Loan, you must be in your grace period or have already entered repayment for each loan that is selected for consolidation. Consolidation generally extends the repayment period which results in a lower monthly payment by giving borrowers up to 25 years to repay their loan which may make it easier for you to repay your loans; however, you will pay more interest if you extend your repayment period through consolidation as you will be making payments for a longer period of time. Once made, Federal Consolidation Loans cannot be ‘unmade’ since the loans that were consolidated have been paid off and, therefore, no longer exist. If you do not feel that you will need monthly payment relief, you should carefully compare the cost of repaying your unconsolidated loans against the cost of repaying a consolidation loan. But, you MUST consolidate your loans if you are considering one of the loan cancellation options.
Helpful Hints to remember as you complete the online consolidation application and promissory note:
- Refer to the Repayment Plan options for a better understanding of the benefits of loan consolidation, particularly the ‘Income Based Repayment’ (IBR) option.
- Determine the payment plan that works best for you; use the U.S. Department of Education’s Online Calculator to estimate your monthly payments for the four (4) different repayment plans.
- Refer to Top 10 Student Loan Tips for more information as you transition into repayment/consolidation to help avoid the pitfalls of loan default.
- Before beginning the online consolidation application and promissory note, gather your loan records, account statements and related forms. Information you will want to gather includes:
- the balance of your outstanding loan(s) which you can obtain at NSLDS (you will use your FAFSA PIN to sign into NSLDS) and can retrieve all outstanding loans and the servicer(s) who currently maintain your loans (click on the number of each individual loan (ie: 1, 2, 3 etc.) to see the servicer(s) name which is identified in the ‘Servicer/Lender/Guaranty Agency Information’ section).
- Or, if you are already in repayment, gather pertinent loan information from your coupon booklet(s).
- IMPORTANT! When listing your loan(s) on your consolidation application, it is very important that you enter the full description of your servicer (eg: Dept Ed/Sallie Mae, not just Sallie Mae) AND the servicer’s complete address. NOTE: this information can be found at NSLDS (click on the number of each individual loan (ie: 1, 2, 3 etc.) to see the servicer(s) name which is identified in the ‘Servicer/Lender/Guaranty Agency Information’ section).Your servicer(s) could be different so pay special attention to the information from the ‘Servicer/Lender/Guaranty Agency Information’.
- You may wish to copy/paste your loan information from the NSLDS website into the consolidation application to avoid keying errors; if loan numbers are needed, enter your Social Security Number. Again, pay special attention to the servicer names to ensure you are reporting the correct servicer on your consolidation application (ie: Dept Ed/Sallie Mae, not just Sallie Mae).
For more information, refer to the loan consolidation’s Frequently Asked Questions OR contact the Direct Loan Consolidation Center at 1-800-557-7392 (or, TTY for the hearing-impaired at 1-800-557-7395).
Or feel free to contact the MSU Financial Aid Office at email@example.com call us at 940:397-4214 if we can be of any assistance.
Begin the Loan Consolidation process now!