How Federal Student Loan Consolidation Works

Find out more about federal student loan consolidation before you apply. We'll explain how it works, who is eligible, and what the benefits are.

Federal Student Loan Consolidation Process

Federal student loan consolidation is a free program whereby federal student loan holders bundle their debt into a single loan with one creditor. You then have only one monthly payment and one due date to worry about instead of dozens. Federal student loan consolidation is sponsored by the government, which is why it is free, but federal consolidation loans are still originated by private lenders. When you apply for federal student loan consolidation, we will contact you via telephone within 15 minutes of receiving your application (if you apply during normal business hours). One of our federal student loan consolidation representatives will review your application and help you complete the process. Our federal student loan consolidation process can be completed paperlessly, thanks to our online electronic signature technology.

Eligibility for Federal Student Loan Consolidation

Both parents and students with federal student loans can be eligible for federal student loan consolidation. You can only take advantage of federal student loan consolidation once, so your loans cannot have been previously consolidated. You will need to have at least $5,000 in student loans, not be in default on any loans, no longer be enrolled in school half time or more, and be in a grace or repayment period on your loans. For parents, you can consolidate at any time, even when your child is still in school, as long as the loan has been fully disbursed. Grad PLUS loans are also eligible for federal student loan consolidation.

Benefits of Federal Student Loan Consolidation

Federal student loan consolidation can offer you many valuable benefits. Here are some of the advantages of federal student loan consolidation:

• Lower your monthly payment by as much as 60%
• Get a low, fixed interest rate for the life of your loan
• Extend your repayment period for up to 30 years
• No co-signer or credit check required
• Free program—no application fees, origination fees, or other charges
• No prepayment penalties
• Make one easy payment to one creditor each month
• Use the money you save on federal student loan consolidation to pay off other, high-interest debt

If you would like to know the differences between private and federal loans, please visit our private vs. federal page.