Student Loan Refinance

How do I get a consolidation loan?

• FFEL Consolidation Loan—You (or your parents, for a FFEL PLUS Consolidation Loan) can contact the consolidation department of a participating lender or a debt consolidation service for an application and more information. If the [ad]same FFEL loan holder holds all the loans you want to consolidate, you should obtain your debt consolidation loan from that loan holder.

• Direct Consolidation Loan—You (or your parents, if they want a Direct PLUS Consolidation Loan) can contact the Direct Loan Origination Center’s
Consolidation Department at 1-800-557-7392, or go to www.loanconsolidation.ed.gov. TTY users may call 1-800-557-7395.

To try and consolidate student loan, you must consolidate at least one Direct Loan orone FFEL Loan. (For example, if you have only Federal Perkins Loans, you can’t get a consolidation loan.) If you don’t have a Direct Loan, but you have an FFEL Loan, you must first contact your FFEL lender about getting a FFEL Consolidation Loan, before contacting the Direct Loan Consolidation Department consolidation loan? Currently, the interest rate for both Direct and FFEL Consolidation Loans is a fixed rate for the life of the loan
(unlike Direct and FFEL Stafford Loans, which have variable
interest rates). The fixed rate is based on the weighted average of the
interest rates on all of the loans you consolidate, rounded up to the nearest one-eighth of 1 percent. The interest rate will never exceed 8.25 percent for student loans and 9.0 percent for PLUS Loans.

Are there any disadvantages to getting  a consolidation loan?

Yes, there could be. For example, consolidation of debt significantly increases the total cost of repaying your loans. Because you have a longer period of time to repay, you’ll pay more interest. In fact, consolidation of debt can double total interest expense. So, compare.

Once made, a college loan consolidation cannot be revoked for any reason (e.g., because the applicant divorces or changes his or her mind, etc.) because the underlying loans that were consolidated have been paid off and no longer exist.