Due to market conditions, many lenders aren't currently offering consolidation loans. If you're considering student loan consolidation, please contact your existing lender(s) for more information about consolidation or other repayment alternatives.
Consolidation allows you to combine all of your federal student loans into a single, more manageable loan with one monthly payment. Consolidating your loan extends your repayment period up to 30 years depending on the loan amount. You may also be able to secure a lower fixed interest rate for your loan(s).
• Who can consolidate?
• What loans can be consolidated?
• How's the interest rate calculated?
• Can I reconsolidate my existing consolidation loan?
• Who do I contact about consolidation?
• Is consolidation right for me?
For all loans except HEAL, a fixed interest rate is determined by taking the weighted average of the interest rates, rounded up to the nearest one-eighth of one percent, not to exceed 8.25 percent.
How to calculate the weighted-average interest rate |
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Steps |
Example |
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| Step 1 - Multiply the balance of each loan to be consolidated by that loan's current interest rate. A variable rate loan should be included in the calculation at the current rate. | The loan balances are $3,500, $3,200 and $5,500 - for a total balance of $12,200. The current interest rates for the loans are 7, 5 and 3.42 percent. $3,500 X .07 = $245 $3,200 X .05 = $160 $5,500 X .0342 = $188.10 |
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| Step 2 - Add the results of the calculations from Step 1. Then divide the total by the balance of all loans being consolidated. | $245 + $160 + $188.10 = $593.10 $593.10 / $12,200 = .0486 or 4.86% |
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| Step 3 - Round the result of Step 2 up to the nearest eighth of one percent, not to exceed 8.25%. | 4.86% is rounded up to 5% | ||
If you currently have a consolidation loan, you aren't eligible for another consolidation loan unless you have a new or pre-existing federal student loan that wasn't in the previous consolidation.
Borrowers can request to add new loans to an existing consolidation loan within 180 days of the date the consolidation loan is made.
When reconsolidating consolidation loans, it is important to note that the weighted average is calculated on the current fixed rate of the consolidation loan and the rate of any other loan(s) being included in the new consolidation loan.
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If you're interested in consolidation, contact a consolidation lender. You can consolidate loans with any participating lender, even if your loans are held by another lender.
If your lender doesn't offer loan consolidation or can't offer you an income-sensitive repayment option, you may apply to any other lender that participates in loan consolidation.
You can review information about your federal student loans and other sources of federal financial aid through the National Student Loan Data System (NSLDS) Web site at www.nslds.ed.gov.
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Consider the following when making consolidation decisions:
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