It is very dangerous to consolidate federal loans into a private consolidation loan. Click espanol to find a Spanish version of the on-line application. You will lose your rights under the federal loan programs once you choose to consolidate with a private lender. Not surprisingly, this caused a lot of problems for borrowers and Congress eliminated the program as of July 1, Federal Government Consolidation Loans Direct consolidation loans are now the only type of federal student consolidation loan. You will generally receive your first bills within 60 days after the new Direct Consolidation loan is made. These borrowers should also be able to consolidate and choose ICR. Each semester, you may have taken out a new loan. This is not as useful as it used to be for most borrowers since nearly all new federal loans are made through the Direct Loan program. The Department provides the following contact information if you have questions: Consolidation is similar to refinancing a loan. Be sure to meet the deadline for responding if you think there are problems with the consolidation or if you have decided you do not want to go forward. You must select a servicer. You will need to sign in using your personal identifiers and PIN.
You might lose the benefit of a flexible payment plan or other payment options such as a deferment. This can include interest rate discounts and principal rebates. These borrowers should also be able to consolidate and choose ICR. The Department strongly encourages borrowers to apply on-line, but you may also download and print a paper application to submit by regular mail. You may also lose some options and protections if you consolidate certain federal loans, particularly Perkins loans , into other federal loan programs. Loan Terms, Fees, and Limits Interest rates for consolidation loans are fixed. Consolidation is one way to get out of default and back into current repayment. You will need to sign in using your personal identifiers and PIN. It is hard to know which servicer to choose. It is very dangerous to consolidate federal loans into a private consolidation loan. Loans that are not eligible for consolidation include state or private loans that are not federally guaranteed. This may be a good idea if you want a single monthly payment. Be sure to meet the deadline for responding if you think there are problems with the consolidation or if you have decided you do not want to go forward. Borrower and Reference Information, and 5. As you weigh the pros and cons, keep in mind that timing is critical. You can indicate this when you apply, and the consolidation servicer will wait to process your application until the appropriate time. The interest rates for consolidation loans are calculated based on the average interest rates of the loans that you are consolidating. Parent PLUS borrowers who also have other federal student loans and choose to consolidate with Direct Loans will find that the PLUS loan taints the entire consolidation loan and will mean that they will not be eligible to repay the consolidation loan using income-driven repayment. Private Consolidation Loans Borrowers cannot consolidate private student loans with the federal consolidation loan programs. 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. Congress eliminated this right in This will obviously depend on your credit history, the rates on your existing loans, and the interest rates your new lender can offer you. Pros of Student Loan Consolidation Simplicity: There are numerous problems that can arise—for example, if one of the divorced ex-spouses wants to apply for IBR. Borrowers with more recent loans may also get a benefit now that interest rates are changing each year.
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