COLLEGE COMPASS -- FFEL Consolidation Loans
FFEL CONSOLIDATION LOANS
Consolidation loans allow a borrower to combine different types of
federal student loans to simplify repayment. (A borrower with just one
loan can choose to consolidate it.) Both the Direct Loan Program and
the FFEL Program offer consolidation loans. However, Direct
Consolidation Loans and FFEL Consolidation Loans are very different.
What is an FFEL Consolidation Loan?
An FFEL Consolidation Loan is designed to help student and parent
borrowers consolidate several types of federal student loans with
various repayment schedules into one loan. With an FFEL Consolidation
Loan, you'll make only one payment a month. FFEL Consolidation Loans
are available from participating lenders, such as banks, credit
unions, and savings and loan associations.
What kinds of loans can be consolidated under an FFEL Consolidation
Loan?
Most federal student loans or PLUS Loans can be consolidated. All the
loans discussed in the Guide are eligible for consolidation. A
participating lender can give you a complete listing of eligible
loans.
There are two type of FFEL Consolidation Loans---subsidized and
unsubsidized. If all of the loans you consolidate are subsidized,
you'll receive a subsidized FFEL Consolidation Loan. If any loan you
consolidate is unsubsidized, you'll receive an unsubsidized FFEL
Consolidation Loan.
What's the interest rate on an FFEL Consolidation Loan?
The interest rate for your FFEL Consolidation Loan will be the
weighted average of the original interest rates of the loans being
consolidated.
What are the benefits of an FFEL Consolidation Loan?
If you have more than one loan, an FFEL Consolidation Loan simplifies
the repayment process, because you make only one payment a month.
Also, the interest rate on the FFEL Consolidation Loan may be lower
than what you're currently paying on one or more of your loans.
How can I get an FFEL Consolidation Loan?
You can consolidate any loans that have entered repayment or that are
in a grace period. If any loan you want to consolidate is in default,
you must make satisfactory repayment arrangements on that loan before
it can be included in the consolidation.
You'll be given more information about consolidation during entrance
and exit counseling sessions at your school. You may also contact the
consolidation department of a participating lender for an application
or more information.
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