Frequently Asked Questions

Consolidation Loans combine several student loans into one bigger loan from a single lender which is then used to pay off the balances on the other loans. It is very similar to refinancing a mortgage. Consolidation loans are available for most federal loans, including FFELP (Stafford, PLUS and SLS), FISL, Perkins, Health Professional Student Loans, NSL, HEAL, Guaranteed Student Loans and Direct loans.
Borrowers can choose from multiple repayment plans with various term selections to repay their consolidation loan(s), including an Income Contingent Repayment and an Income-Based Repayment Plan. These plans are designed to be flexible to meet the different and changing needs of borrowers. With a student consolidation loan, borrowers can switch repayment plans at anytime. If you select the IBR Plan and want to change at a later date, your only option will be the Standard Plan.
There is no minimum amount required to qualify for a Direct Consolidation Loan or Student Loan Consolidation program
Your Federal student loans are considered in default after 270 days (9 months) of non-payment. Consequences include:
Immediate increase in the interest rate of your student loans to 18.5% in addition to any collection agency fees.
Immediate loss of your Title IV Financial Aid benefits.
Negative reporting to the three credit bureaus that could result in difficulties obtaining home and auto loans and credit cards.
Withholding of your federal income tax return by the IRS to repay the defaulted student loans. Administrative Wage Garnishment of up to 25% of your paycheck.
On average it only takes 4-8 weeks to remove your loans out of a default status.
It is extremely difficult to discharge federal student loans in a bankruptcy unlike credit cards or any other type of private lender debt.
Yes you can however the consolidation process is a complex one. If you prepare the documents on your own and make an error, you will automatically be placed in the Standard Program where you can expect your payment to be much higher than the programs based on family size & income. This error could potentially cost you 1000’s of dollars.
Only the Department of Education can offer the benefits of programs like Income Based Repayment program which has loan forgiveness features.
If you are now in a “Delinquent” status with your current lender(s), consolidating your loans will bring you to a “Current” status. Keep in mind, if you don’t pay your new loan payment you run the risk of wage garnishment.
Consolidating your student loans will actually improve your credit score. The government pays off your student loans in full. Within 60 – 90 days your credit report will show loans in current status and paid in full.
Find out how much you can save by consolidating your student debt:

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