Student Loan Consolidation and Loan Reduction Programs

Student Loan Consolidation and Loan Reduction Programs

Students usually have one or more reasons to apply for loans and these reasons could include feeding,
accommodation, textbooks, tuition, and many other reasons. Often times, some students find
themselves having multiple loans to pay back and this could be quite stressful and difficult to achieve.

Taking the loan could of course come in handy and relieve a lot of stress, but paying back could be
difficult in some instances. Once a student has an existing loan, there are usually various options he or
she could consider and one of these options is loan consolidation. In this article, we will be discussing all
there is to know about student loan consolidation.

A Consolidation Loan lets you combine multiple student loans into a single loan. What a consolidation
loan does is to make sure you pay only a single payment per month rather than multiple loan payments.
One major benefit of loan consolidation is that you can get more loan repayment plans and have access
to loan forgiveness programs.

Should you consolidate your student loan?

This is based on the circumstances you find yourself at that particular moment as there are advantages
and disadvantages to consolidating your loan.


– if you have more than one loan with different loan service providers, having the loans
consolidated means all the loans will be combined into one and you will only make a single
monthly payment.

– Loan consolidation can help you reduce the amount you pay monthly and your loan repayment
period can be extended by up to 30 years.

– With loan consolidation, you can change all of your loans with variable rates to fixed-rate loans.

– Due to the fact that loan consolidation extends your loan repayment time, you may end up
paying more interest and more payments than you normally are supposed to make if you do not
consolidate your loans.

– Loan consolidation eliminates you access to some borrower benefits such as principal rebates,
discounts on interest rates and other loan cancellation benefits that could be attached to your
current loans.

If you are thinking of reducing the amount you pay monthly on your loans but you are worried about the
disadvantages of loan consolidation, there is an alternative you can consider and that is forbearance or
deferment. You could also switch to a repayment plan that is income-driven. One fact that you need to know is that, the moment your loans are consolidated into one, they cannot be removed. The
consolidated loans will be paid off and will no longer exist.

What types of loans can be consolidated?

A lot of different types of loans can be consolidated and of course most federal loans can be
consolidated. Listed below are the different types of loans that are eligible for consolidation:

 Supplemental Loans for Students
 Nursing Student Loans
 Nurse Faculty Loans
 Loans for Health Education Assistance
 Loans for Health Professions Student
 Disadvantaged Students Loans
 Direct Subsidized Loans
 Direct Unsubsidized Loans
 Direct PLUS Loans

Your loan consolidation is only possible after you graduate or drop below half-time enrollment.

What are the things required to make a loan consolidation process successful?

Listed below are some of the requirements for eligibility of a student loan consolidation;

 For your loans to be eligible for consolidation, all the loans must be in either repayment period
or grace period.

 An existing consolidation loan cannot be consolidated except you include another eligible loan
in the consolidation. That is, another loan that is in its repayment of grace period.

 If you have defaulted on the payment of a particular loan, you must either make arrangements
for satisfactory repayment (that is, consecutive monthly payments for three months) or you
repay your new direct consolidation loan under the following plans: Income-Contingent
Repayment Plan, Income-Based Repayment Plan, Revised Pay as You Earn Repayment Plan, or
pay as you earn Repayment Plan.

 If you already have a wage garnishment order on a defaulted loan, the loan cannot be
consolidated until the wage garnishment order has been lifted.

What is the interest rate on a student consolidation loan?

Throughout the life of a consolidated loan, the interest rate is fixed and it is calculated by calculating the
weighted average of the interest rates on all of your loans that you are consolidating.

When do you start repaying a consolidation loan?

Repaying a consolidation loan does not commence until about 60 days after the loan is paid out. This
information will be made available to you by your loan service provider of course. If you have any of
your loans in the grace period, you can inform your loan servicer that you would like to have the
consolidation delayed till towards the grace period. If you choose this option, you will not start repaying
your loan consolidation until when the grace period is nearing its end.

Are there different repayment plan options?

Yes. These options vary from borrower to borrower. Since there are different needs and different means
of repaying loans, your repayment plan will be based on the means through which you will be repaying
your loan. There is the income-driven repayment plan which is based on your monthly earnings and the
size of your family.

How is the application for a loan consolidation done?

Student loan consolidation is applied for through and the application can be done
either online or you print the application form, fill it and mail it through U.S Mail. Once your application
has been submitted, the loan consolidation servicer will take action on your eligible loans. It is the loan
servicer you will refer to for updates on your loan consolidation application. Except the loans you intend
to consolidate are in grace period, forbearance or deferment, you should make sure you continue to
make payments on those loans until you get the informed that they have been paid off with your new
student consolidation loan.

If you have any further questions regarding the consolidation of your loans, contact the loan
consolidation information call center.

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