This means, for example, that a Perkins Loan on its own cannot be consolidated into a Direct Loan.You may consolidate with Direct Loans during grace periods, once you have entered repayment, or during periods of deferment or forbearance.These include deferment, forbearance, cancellation, and affordable repayment rights.Also, federal consolidation loans generally have lower interest rates.Loans that are not eligible for consolidation include state or private loans that are not federally guaranteed.Although all of these different loans may be consolidated, you must have at least one outstanding FFEL or Direct Loan to obtain a Direct Consolidation Loan.As you weigh the pros and cons, keep in mind that timing is critical.
Further, borrowers with joint FFEL consolidation loans, according to the Department, may not reconsolidate into Direct Loans and therefore are not eligible for public service loan forgiveness. The fixed rate is based on the weighted average of the interest rates on the loans at the time of consolidation, rounded up to the nearest one-eighth of a percentage point.
The Department strongly encourages borrowers to apply on-line, but you may also download and print a paper application to submit by regular mail. Prior to July 1, 2006, married borrowers could choose to consolidate federal student loans from both spouses or jointly consolidate the loans of either spouse.
The Department provides the following contact information if you have questions: If necessary, you can also try calling the general Student Loan Support Center at 1-800-557-7394. Both borrowers had to agree to be jointly and severally liable for repayment.
Using Studentloans.gov: You will need to sign in using your personal identifiers and PIN. You are required to select from the choices listed by the Department of Education). (“Joint and several liability” means that both borrowers are fully liable for the full amount of the debt). Not surprisingly, this caused a lot of problems for borrowers and Congress eliminated the program as of July 1, 2006.
The electronic application consists of five steps: 1. If may make this choice on-line or if you are sending in a paper application, you should send directly to the servicer you choose. The Department provides some general information about servicer performance in the on-line data center and quarterly performance reports. There are still many borrowers struggling with joint consolidation loans.
The good news is that the Department explains on its web site that if any loan you want to consolidate is still in the grace period, you can delay entering repayment on your new Direct Consolidation Loan until closer to your grace period end date.