Student Loan Consolidation Frequently Asked Questions
Q: Is there a cost for consolidating student loans?
A: There are no fees for applying for or consolidating federal student loans. There may, however, be nominal fees for private student loan consolidation. Lenders may change you an up front application fee or a fee once your loan is consolidated.
Q: Do I need good credit to consolidate my student loans?
A: It depends on whether you are consolidating your loans through the federal government or through a private lender. The federal government does not look at your credit rating when making a decision but private lenders do. In fact, you may be eligible for federal student loan consolidation without any collateral, a co-signer, or having to go through credit checks. For private student loan consolidations, however, you and your co-signer will most likely have to go through a credit check and a good credit rating will go a long way.
Q: Do I need a co-signer to consolidate my student loans?
A: Co-signers are not required for federal student loan consolidation. Private lenders, however, do often require undergraduates and new graduates to have a co-signer. If, however, you have a very strong credit rating this requirement may be waived.
Q: Can federal and student loans be consolidated together?
A: No, they cannot. You can consolidate them separately so you'd end up with two loans - one federal and one private.
Q: Can you consolidate your loans while still in school?
A: No, you cannot consolidate while you are still enrolled full-time. You can only apply to consolidate them once you've graduated or are enrolled less than half time.
Q: What are the requirements for federal and private student loan consolidation?
A: The eligibility criteria for consolidating federal student loans are outlined here under the "Federal Student Loan Consolidation" section. The requirements for private student loan consolidation are lender specific.
Q: What types of federal student loans can be consolidated?
A: You can consolidate most subsidized and unsubsidized federal loans such as your Stafford, Parent PLUS, HEAL/HPSL, Perkins, and all Federal FFELP and Federal Direct Loans.
Q: How are the interest rates for consolidated federal and private student loans calculated?
A: The interest you pay for consolidated federal student loans is a fixed rate equal to a weighted average of the interest rates on your existing loans at the time you apply for consolidation. The calculated rate is typically rounded up to the nearest 0.125%, and capped at 8.25%. Interest rates for consolidating private student loans are based on either the LIBOR or Prime index, plus a margin for borrower or cosigner credit. Click here for more information.