Federal Student Loan Consolidation is a program available to students and former students with federal student loans. The program essentially allows student loan borrowers of any federal student loan (Perkins, Stafford, Direct Subsidized or Direct Unsubsidized Loans) an opportunity to combine all individual monthly loan payments into one monthly payment. Consolidation generally extends the repayment period, resulting in a lower monthly payment. However, you will pay more interest if you extend your repayment period through consolidation. Upon application approval, the new consolidated loan lender or servicer pays off the individual loans (being considered for consolidation) and creates a brand new loan in the student borrower’s name. New interest rates, repayment options/incentives, and applicable benefits or fees apply.

Federal Parent Loan for Undergraduate Student (PLUS) Loan Consolidation Program is the equivalent consolidation loan program available to parent loan borrowers. Parents with multiple PLUS loans may consolidate all of their monthly loan payments into one monthly payment under this program, even if the loans were approved for multiple students.

The following information applies to both student and parent loans:

The interest rate of the consolidated loan is calculated by a weighted average of the interest rates of the loans included in the consolidation. The lender or servicer will be able to help determine the interest in a specific situation. Changes in interest rates, if applicable, are made annually on July 1^st.

Questions to ask consolidation representatives prior to supplying personal information:

• How did you get my name and contact information?
• Who is the servicer of the consolidated loan?
• Who will I contact if I have questions about the consolidation application?
• Who will I contact if I have questions or updates during my repayment?
• How long does the application process typically take?
• Do I have the ability to manage my loan repayment status on line?

Rebates and/or repayment incentives are generally available. These include the following:

• 0.25% interest rate reduction (or comparable benefit) if repayment is processed by auto-debit from checking or savings account.
• 1.0% interest rate reduction (or comparable benefit) if borrower makes 36 on-time monthly payments.

Pros and Cons of consolidation options:

Benefits:

• One repayment point if your loans are currently with multiple lenders.
• Fixed interest rate
• Ability to extend repayment terms over 10 or more years if loan balance is high.

Cautions:

• May lose 6 month grace period and be forced to go into immediate repayment upon graduation.
• May lose repayment benefits or cancellation options.
• Consolidating loans with wide ranges of interest rates may result in higher repayment totals. (i.e., Perkins fixed rate = 5% and Subsidized variable rate = 3.37%; Consolidated loan weighted average may = 4.19% for all loans).
• Longer repayment periods will result in additional interest charges.

Educational loans currently unavailable for consolidation with Federal Student Loans include:

• Parent Loans for Undergraduate Students (PLUS) – parents may consolidate multiple PLUS loans but PLUS may not be consolidated with student loans
• Alternative or Private Student Loans (i.e., Key Alternative Loan, CitiAssist, Sallie Mae, Teri Loans, Chase, Educaid, etc.)
• BGSU Schell Loans

Be sure to review all your options before consolidating the following loans:

• Nursing Loans – may be consolidated but any possible repayment benefits through the U.S. Department of Health and Human Services may be lost.
• Perkins Loans – may be consolidated but any loan forgiveness benefits will be lost. Refer to BGSU Student Loan Collections website: www.bgsu.edu/offices/bursar/loans.html for more information.

Information on loan consolidation and loan comparison calculators are available at www.finaid.org. This site is not affiliated with any specific lender or agency and will provide an unbiased view of the options that may be available. Many lenders and loan servicers have calculators on their specific sites that may also be useful. The Direct Loan Consolidation Center at 1-800-557-7392 or www.loanconsolidation.ed.gov is just one of these servicers.