Loan Consolidation FAQs

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. The current interest rate on the loans being consolidated is rounded to the nearest higher 1/8th of one percent with only one lender and one monthly bill no matter how many loans were included in the consolidation. Your one lender will be the U.S. Department of Education. Private loans and Federal Direct Parent PLUS loans cannot be consolidated with federal student education loans.

Frequently Asked Questions

What kinds of loans can be consolidated?

Most federal student loans, including the following, are eligible for consolidation:

  • Direct Subsidized and Unsubsidized Loans
  • Subsidized and Unsubsidized Federal Stafford Loans
  • Direct PLUS Loans
  • PLUS loans from the Federal Family Education Loan (FFEL) Program
  • Health Education Assistance Loans
  • Health Professions Student Loans
  • Supplemental Loans for Students (SLS)
  • Federal Nursing Loans
  • Some existing consolidation 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?

A Direct Consolidation Loan has a fixed interest 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. There is no cap on the interest rate of a Direct Consolidation Loan.

What are the repayment options?

Seven different plans to repay your consolidated loans exist, they are:

  • Standard
  • Income Contingent
  • Income-based
  • Extended Repayment Plans
  • Graduated Repayment Plans
  • Pay as You Earn
  • Income-Sensitive

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, visit the Federal Student Aid website.

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 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.

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, visit the Federal Student Aid website.

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 the Direct Consolidation Loans website.