Consolidating loans with department of education

If you have several federal education loans, you may want to consider combining them into one new loan with one monthly payment.This is called loan consolidation and can help keep you organized and on track with repayment. Department of Education (ED) encourages borrowers with both types of loans to consolidate them into the Direct Loan program.

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If you just want to reduce your monthly payment, discuss the federal loan repayment options available with your lender. Single Payment If you have loans with multiple lenders/holders, you send a monthly payment to each.

However, if you consolidate all those loans, you make a single payment.

Lower Monthly Payment Consolidation loan monthly payments are lower because the repayment period is longer.

Loss of Deferment and Forgiveness Benefits You may not be eligible to receive the same deferments on your Consolidation Loan that you were eligible to receive on your original loans.

Also, you might lose eligibility for certain cancellation or forgiveness programs, especially if you are including Perkins Loans in the Consolidation.

(In either case, check with your lender.)More Interest Paid With a longer repayment period, you'll pay more interest over the life of the loan.Manage Monthly Budget Savings from reduced monthly payments allows you to pay other monthly bills with higher interest rates, such as credit cards.Remove Loans From Default Status After making satisfactory repayment arrangements with the holder of your loans in default, you can consolidate those loans and reinstate benefits (deferments, eligibility to apply for financial aid, etc.) that were lost when your loans were placed in default.No Extra Costs There are no application or processing fees and there are no prepayment penalties.Visit the Federal Student Loan Consolidation Webpage for more information. You should know the interest rate, fees and terms before you sign any agreement.In general, you cannot consolidate private loans into federal loans, but avoid the temptation to consolidate federal loans into private; you may lose some valuable benefits available to federal loan holders.

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