These are some of our most frequently asked questions we get regarding student loans.
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(Question) What are the benefits of consolidating my loans?
(Answer) All of your existing loans will be consolidated into the Federal Loan Forgiveness Program with the Department of Education. You will only have to worry about one payment instead of multiple payments. Your debt will therefore be much easier to manage.
(Question) Will I receive a reduced payment?
(Answer) In a lot of cases, yes. You will see your payment in the new consolidated loan decrease significantly. However, we must remind you that there are multiple plans through which to repay your loans, one of which is the Income Based Repayment Plan, which allows your payment to be based on your annual income.
(Question) Is there a minimum or maximum loan amount that qualifies?
(Answer) Not at all!
(Question) Can I defer my payments?
(Answer) Yes. You are welcome to defer your payments if necessary once you have consolidated your loans.
(Question) Will I retain my subsidy benefits?
(Answer) Yes. Borrowers will be able to retain their benefits on subsidized loans when they have been consolidated.
(Question) Am I eligible for a Direct Consolidation Loan?
(Answer) Possibly. Borrowers must have at least one Direct Loan of Federal Family Education Loan (FFEL) that is in grace, repayment, deferment, or default status to qualify. If you are currently in school, you do not qualify for a consolidation loan. If you are in default right now, you can consolidate under the Income Contingent Repayment Pay or Income Based Repayment Plan. If you are already consolidated but have one loan left that is not, you can move that loan into the consolidation as well.
(Question) Can my PLUS Loan be consolidated?
(Answer) Yes. There is no reason why PLUS Loans cannot be consolidated.
(Question) Can I consolidate my Perkins Loan?
(Answer) Yes. You can do this if you include at least one Direct Loan or Federal Family Educational Loan (FFEL). Also, we like to advise our clients that there are some disadvantages to consolidating your Perkins Loan, so you should consider all the options before making a final decision.
The potentially negative consequences of consolidating your Perkins Loan are listed below.
- You will lose your cancellation benefits, such as performing public services.
- Your grace period may be lost.
- Interest does not accrue when your Perkins Loan is in deferment.
- Perkins Loans generally have lower interest rates but somewhat less flexible repayment periods.
(Question) Can I consolidate health profession loans?
(Answer) Yes–depending on your circumstances, this could be possible. You can consolidate certain health professions loans sponsored through the U.S Department of Health and Human Services with other Federal Education Loans, but you still must include at least one Direct Loan or Federal Family Education Loan in order to qualify.
The following health professions qualify:
- Health Professions Student Loans (HPSL)
- Health Education Assistance Loans (HEAL)
- Loans for Disadvantaged Students (LDS)
- Nursing Student Loans (NSL)
Some benefits include lowering your monthly payment, having a longer repayment period, and having only a single monthly payment.
(Question) Can I consolidate if I am currently enrolled in college and attending?
(Answer) Yes, but there are certain limitations to keep in mind. Borrowers cannot consolidate loans that are an in-school status. On the other hand, if your loans are in grace, repayment, or deferment, you are welcome to consolidate them.
(Question) If I am already consolidated, am I allowed to do so again?
(Answer) Yes. You are able to as long as you include at least one other FFEL or Direct Loan in the new consolidation.
(Question) Can I consolidate my loans that are in grace?
(Answer) Yes. You can consolidate loans during their grace period. However, this will cause you to lose your remaining grace period.
(Question) Can I delay my application so I don’t lose my grace period?
(Answer) Yes, you can do this. You can delay your application to take full advantage of your grace period, but indicate that this is your intention on your application.
(Question) Can I consolidate a loan in default?
(Answer) You can consolidate defaulted loans as long as you agree to pay under either the Income Contingent or Income Based Repayment Plan, or make satisfactory repayments with your current loan holder. There are also some circumstances where you cannot consolidate a default loan. For example, if a judgment has been issues against a defaulted loan that has not been dismissed, you are not allowed to consolidate this loan.
(Question) Will consolidating clear the default notation from my credit?
(Answer) No. Unfortunately, this will not work. If you want to clear the default notation, you will need to contact your loan holder to discuss another option with them, such as rehabilitation. If you decide to consolidate while in default, your default notation will remain on your credit history for seven years, although once it is paid off in full this will be stated on your credit report.
(Question) Can I switch to different plan later on?
(Answer) Yes. In most cases, you can change to a different repayment plan at any time once your loans have been consolidated. However, be aware that borrowers who are in the ICR plan must make at least three consecutive payments into the Direct Consolidation Loan account before changing to another plan. There is no limit to how many times you can change plans, but borrowers in the IBR plan can only switch over to the standard repayment plan.
(Question) How long does the consolidation process typically take?
(Answer) It will typically take 60-90 days to consolidate. This accounts for the time from when the lender has received your application to the time when your loans are officially consolidated.