- One payment to one lender- With consolidation, you only make one monthly payment and you have one lender- the Department of Education.
- Lower Monthly Payment- Your payments are lower because you have longer repayment period. Under the standard repayment plan, your payment period can be up to 30 years.
- A fixed rate- Your consolidated loan will have a fixed interest rate during the life of the loan. Your rate is based on the weighted average of all your consolidated loans. Your interest rate will not exceed 8.5%.
- No Minimum or Maximum Loan Amounts or Fees- Consolidation is free.
- No penalty for paying off your loan early
- More interest- Since you have an extended repayment period, you will pay more in interest over the long term.
- Loss of benefits. With consolidation you will longer be able to take advantage of certain incentives such as loan cancellations and interest rate reductions.
- Higher interest rate- The interest rate on your consolidated loan may be higher than the interest rates on you individual loans.
NOTE: DO NOT consolidate your federal student loans with your private student loans. When you mix the two types of loans, you loans are no longer backed by the government and you have a private lender. You lose all the benefits you have with your federal student loans when you consolidate with a private lender.
For more information about loan consolidation, visit http://www.loanconslidation.ed.gov/.
All information presented only relates to Federal student loans and is provided by the Department of Education. If you have private student loans, contact your lender(s).