federal consolidation

Federal Consolidation Loans
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OVERVIEWThe Federal Consolidation Loan Program allows a borrower to consolidate all or part of eligible outstanding federal student loans into one new loan. This allows a borrower to have one lender, one loan and one loan payment. Borrowers should be advised that by consolidating any federal student loans they will lose all current borrower benefits offered on those loans.
BORROWER ELIGIBILITYAt the time of application, a borrower must be in a grace period or repayment status on all loans being consolidated. If the borrower has delinquent or defaulted loans, the borrower should contact the loan holder of those loans to find out if they are eligible for consolidation.

DISADVANTAGES OF CONSOLIDATINGConsolidation is not in the best interest of every borrower. Borrowers that have current will lose all benefits if those loans are consolidated. Additionally, while consolidation does allow for longer repayment periods and fixed interest rates, borrowers may end up paying much more in interest by extending their repayment plan.
INTEREST CHARGESFederal Consolidation loan interest rates are fixed rates determined by the weighted average of all the loans a borrower is consolidating, rounded up to the nearest 1/8th of one whole percent or a maximum of percent, whichever is less.
Borrowers should be advised that if they choose an extended repayment plan

on their consolidation loan they could potentially end up paying much more in interest than if they had selected a standard repayment term.