Loan Consolidation FAQs

Federal Direct Student Loans

Federal Perkins Loans

Federal PLUS Loans


Federal Direct Student Loans

What is loan consolidation?
Consolidation is a practical debt management tool that enables you to bundle all of your federal loans into one. This allows you to convert multiple, variable rate loans into one single loan with an interest rate that is fixed for the life of the loan.

Consolidation leaves you with one monthly loan payment, no matter how many loans were included in the consolidation.

What kinds of loans can be consolidated?
Eligible loans include the following:

  • Direct Subsidized and Unsubsidized Loans
  • Direct Consolidation Loans
  • Guaranteed Student Loans
  • Federal Perkins Loans
  • Federal Insured Student Loans
  • Federal Supplemental Loans
  • Auxiliary Loans to Assist Students
  • National Direct Student Loans
  • National Defense Student Loans
  • Health Education Assistance Loans
  • Health Professions Student Loans
  • Loans for Disadvantaged Students
  • Nursing Student Loans

Ineligible loans include the following:

  • Loans made by a private lender
  • Primary Care Loans
  • Law Access Loans
  • Medical Assistance Loans
  • PLATO Loans

 

How much does it cost to consolidate my loans?
The process to consolidate is free. You can lock in a low fixed rate and have only one monthly payment.

Am I eligible to consolidate if I'm in school?
If you are enrolled at least half-time (6 credit hours), you will no longer be able to apply for in-school consolidations due to federal legislation.

When can I consolidate?
To qualify for Direct Consolidation Loans, borrowers must have at least one Federal Direct or Federal Family Education Loan Program (FFELP) loan that is in grace, repayment, forbearance, or default status. Students cannot consolidate while they are still enrolled in school at least half-time.

You may delay the consolidation of any Federal Direct Loans that are in a grace period by indicating the grace period end date on the Federal Direct Consolidation Loan Application and Promissory Note (the Direct Consolidation Loan application) which is available on the Direct Consolidation Loans website. Delaying the processing of a Direct Loan Consolidation will allow you to benefit from the full grace period during which payments are not required.

What is the interest rate on a consolidation loan?
Currently, the interest rate on a Direct Consolidation Loan is a fixed rate for the life of the loan. The fixed rate is based on the weighted average of the interest rates on the loans you consolidate, rounded up to the nearest one-eighth of a percent. The interest rate does not exceed 8.25 percent for student loans.

What are the repayment options?

Five different plans to repay your consolidated loans exist to include Standard, Income Contingent, Income-based, Extended and Graduated Repayment Plans. Income contingent, Income-based, and Extended repayment plans, while lowering your monthly payment, can increase the overall finance charges incurred over the life of the loan. For more information, see Repayment plans.

Are there any minimum or maximum loan amounts I can consolidate?
You cannot be excluded from being eligible for a consolidation loan based on the size of your loan debt.

How do I apply?
Go to the Direct Consolidation Loans website to apply online or to download a paper copy for submitting by postal mail. You can also apply by phone at 800-557-7392.

I have already consolidated my loans; can I consolidate again?
If you have at least one eligible loan that was not consolidated previously, you are eligible for consolidation again. The prior consolidated loans can also be included.

I am receiving lots of information about consolidation. Who does Miami recommend that I consolidate with?
We recommend that you consolidate through the Federal Direct Consolidation Loan program.

Can I consolidate my current loans with my previous ones?
The enactment of the Higher Education Reconciliation Act of 2005 eliminates in-school loan consolidation effective July 1, 2006.

Can I add loans later if I consolidate now?
If a Direct Consolidation Loan is made, you may consolidate any additional eligible loan(s) by submitting a request to the Department of Education within 180 days after the date on which the Direct Consolidation Loan is made. The Disclosure issued when a subsequent consolidation is completed shall be controlling and will include the balance of the original Direct Consolidation Loan and of the loan added to it.

If you want to consolidate any additional eligible loan(s) after this period, you will need to apply for a new Direct Consolidation Loan.

Can I consolidate my loans with PLUS loans that my parent borrowed to help pay for my education?
No. You can only consolidate eligible educational loans for which you are the borrower. Since your parent is the borrower on the PLUS loan, you cannot include them in your consolidation.

Federal Perkins Loans

Can I consolidate a Perkins loan?
Yes, it is possible to consolidate Perkins Loans into a Direct Consolidation Loan if you include at least one Direct Loan or Federal Family Education Loan (FFEL) in your request. Perkins Loans cannot be included in a Direct Consolidation Loan by themselves.

You should carefully weigh the advantages and disadvantages of including a Perkins Loan into a consolidation. Once a Perkins Loan is consolidated, it becomes a new Direct Consolidation Loan. While you gain the benefits of the Direct Consolidation Loan Program, you also lose the benefits associated with the Perkins Loan program.

We recommend that you consider the following points prior to making a decision:

  • Perkins Loans are eligible for additional cancellation benefits, such as performing certain kinds of public service. This benefit is lost when a Perkins Loan is included in a Direct Consolidation Loan.
  • Perkins Loans have a grace period of nine months.
  • Perkins Loans generally have a lower interest rate but have a less flexible repayment period of ten years.

For more information about consolidating Perkins Loans, see Direct Consolication Loans.

Federal PLUS Loans

Can I consolidate my PLUS loans?
Yes, PLUS loans can be consolidated if the PLUS borrower passes a credit check. A parent with an adverse credit history can obtain a Direct PLUS Consolidation Loan by using an endorser with a good credit history or documenting extenuating circumstances. However, PLUS consolidated loans cannot be repaid under the Income Contingent Repayment Plan or the Income Based Repayment (IBR) Plan Option.

What repayment plans are available for PLUS loan repayment?
Three different plans to repay your consolidated loans exist to include Standard, Extended, or Graduated Plans. The Graduated Plan, while lowering your monthly payment, can increase the overall finance charges incurred over the life of the loan. For more information, see Repayment plans.

Are there fees, charges, or eligibility requirements for PLUS loan consolidation?
The process is free, you can lock in a low fixed rate, and there is only one monthly payment. However, parent borrowers must pass a credit check for PLUS consolidation. For more information about PLUS loan consolidation, see Direct Consolication Loans.