Loan Consolidation

Loan consolidation is a process of combining multiple federal student loans into a single loan with a new repayment term and interest rate. Consolidation does not reduce the total amount of student loan debt, but it can simplify loan repayment by combining multiple loans into one loan with one monthly payment. Consolidation can be helpful in managing student loan debt, especially for borrowers who have multiple loans with different interest rates and monthly payments. By consolidating loans, borrowers can:

1. Simplify loan repayment by combining multiple loans into one loan with one monthly payment.

2. Potentially qualify for a lower monthly payment by extending the repayment term of the consolidated loan. However, keep in mind that a longer repayment term may result in paying more interest over the life of the loan.

3. Potentially qualify for a lower interest rate if the consolidated loan has a weighted average interest rate that is lower than the interest rates on the individual loans being consolidated.

To qualify for loan consolidation, borrowers must have at least one eligible federal student loan that is in repayment, grace, deferment, or forbearance status. Private student loans cannot be consolidated through the federal loan consolidation program. It's important to carefully consider the pros and cons of loan consolidation before applying. While consolidation can simplify loan repayment and potentially lower monthly payments, it may also result in paying more interest over the life of the loan. Additionally, some benefits of the original loans, such as interest rate discounts and loan forgiveness programs, may be lost when consolidating.