Consolidation

What is Loan Consolidation?

Consolidation allows a student to have one lender purchase all of his or her federal student loans (Stafford, Perkins, and Grad PLUS) and "lump" them together into one loan.

Who should consolidate?

Consolidation is appropriate for students who have several student loans and would like the convenience of paying a single lender.

Consolidation is also important for borrowers who wish to participate in the federal government's new public service loan forgiveness program. Only direct lending loans are eligible for forgiveness and therefore borrowers with Stafford or Grad PLUS loans from private lenders may wish to consolidate these loans with the Direct Lending program in order to qualify for forgiveness.

Who should not consolidate?

At this time, students who have borrowed a Citibank Grad PLUS loan should be cautious regarding consolidating their Grad PLUS loans. The 1.25% interest rate reduction given to borrowers during repayment would be lost if consolidated.

Perkins loan borrowers should also think carefully about consolidating a Perkins loan as the "subsidized" nature of the Perkins -not accruing interest in deferment and grace - is lost. A consolidated Perkins loan becomes similar to an unsubsidized Stafford loan in that it will immediately begin accruing interest and will not cease accruing interest even if a borrower returns to school or is unemployed.

Am I allowed to consolidate while still in-school?

No.  Consolidation can only happen once a student's loan is in a repayment status.

More information will be provided to students during student Loan Entrance Counseling in the semester in which a borrower is expected to graduate.

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