Consolidation of Federal Student Loans

If you have loans through the Perkins, Stafford or Plus programs, you have the ability to consolidate these federal student loans into one school loan. This allows you to lengthen the time you have to pay back the loan and only have one monthly payment at a fixed interest rate. The term of these federal student consolidation loans is usually between 10 and 30 years. With these consolidated loans, the monthly payments may be lower, but the amount paid over a longer period of time will be higher. The fixed interest rate is calculated based on the average rate of the loans that are being consolidated. The interest rate is weighted based on the amounts borrowed from each loan.

Federal Student Consolidation loans can reduce your monthly payment up to 60%. They allow you to make only one payment each month. You are able to get a fixed rate interest rate, you can get flexible payment options, and there are no prepayment penalties. Another advantage when you are establishing your financial credit is that it can improve your credit rating.

If you don't want to include a particular loan in your consolidation loan, you can exclude a loan as long as the remaining balance to be consolidated is more than $10,000. Students tend to do this especially if you are eligible to have their Perkins loans forgiven.

Federal Student Loans are available to students that are enrolled in a school that participates in the federal aid programs. Schools are considered a two or four-year private or public university, college or trade school. The loans are offered by private organizations through the Federal Direct Student Loan Program (FDLP) and the Federal Family Education Loan Program (FFELP). The U.S. Department of Education oversees the federal student loan program.

The federal student loans are available to help pay for school expenses which includes tuition, room and board, school supplies, school books, and transportation. You can also use the loans to help pay for computers and dependent care if needed.

You need to check with your school to determine which programs the participate in. There are several different federal student loan programs that are available.

There are around 15 different federal student loans that can be included in a federal student consolidation loan. The following list is the types of federal loans currently offered.

Direct Consolidation Loans

Direct Plus Consolidation Loans

Direct Plus Loans

Direct Stafford Loans (subsidized and unsubsidized)

FFEL Consolidation Loans

FISL (Federally Insured Loans)

Perkins Loans (directly from your school)

Perkins Expanded Lending

Perkins Income Contingent

Perkins National Defense Loans

Plus Loans

SLS (Supplemental Loans)

Stafford Loans (Subsidized or unsubsidized)