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Consolidation Loans

A consolidation loan combines several student or parent loans into one loan from a single lender, which then pays off the balances on the other loans.


Consolidation loans are available for most federal loans, including FFELP (Stafford, PLUS and SLS), FISL, Perkins, Health Professional Student Loans, NSL, HEAL, Guaranteed Student Loans, and Direct loans.

In certain circumstances (for example, when one or more of the loans was being repaid in less than 10 years because of minimum payment requirements), a consolidation loan may decrease the monthly payment without extending the overall loan term beyond ten years. In effect, the shorter-term loan is being extended to 10 years.

The total amount of interest paid will increase unless the borrower continues to make the same monthly payment as before, in which case the total amount of interest paid will decrease. The interest rate on consolidation loans is the weighted average of the interest rates on the loans being consolidated, rounded up to the nearest 1/8 of a percent and capped at 8.25%.

Further Information

To find out more about loan consolidation, visit FinAid.


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