Federal student loan consolidation combines multiple federal loans into a single direct consolidation loan. This simplification can help manage payments and potentially extend your repayment term.

Eligibility for federal loan consolidation requires:

• Graduation, leaving school, or dropping below half-time enrollment
• Loans not currently in default (unless meeting specific requirements)
• Federal loans only (private loans not eligible)

Benefits of federal loan consolidation:

• Single monthly payment
• Access to additional repayment plans and forgiveness programs
• Ability to change loan servicers
• No credit check required
• Free through the Department of Education

Important considerations:

• Interest rate will be weighted average of previous rates (rounded up to nearest 1/8%)
• Unpaid interest may capitalize upon consolidation
• Loan terms range from 10-30 years
• Payments typically begin within 60 days
• May affect existing loan forgiveness progress

For defaulted loans, consolidation requires either:

• Three consecutive, full, on-time monthly payments
• Agreement to enroll in an income-driven repayment plan

Consolidation vs. Refinancing:

• Consolidation keeps loans federal with existing benefits
• Refinancing converts loans to private with potentially lower rates
• Refinancing requires good credit and removes federal benefits

Process for federal consolidation:

1. Gather loan information
2. Visit studentaid.gov
3. Complete consolidation application (approximately 30 minutes)
4. Select servicer and repayment plan
5. Provide references
6. Submit application

Consider consolidation if you:

• Need to qualify for specific federal programs
• Want simplified payment management
• Don't require lower interest rates
• Wish to maintain federal loan benefits

Avoid consolidation if you:

• Have made progress toward loan forgiveness
• Hold Perkins loans eligible for forgiveness
• Need a lower interest rate (consider refinancing instead)
• Are still enrolled in school

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