Currently, the Department of Education offers two federal student loan consolidation programs. Here is what you need to know about each of them:
| Federa student loans | Direct Consolidation Loan | Special Direct Consolidation Loan |
| What is the purpose of this program? | A Direct Consolidation Loan combines multiple federal student loans into a single loan with one new fixed interest rate. It also extends your repayment period, which results in a lower monthly payment. | The Special Direct Consolidation Loan Program ensures that all of your federal student loans are processed by the same loan servicer, making it easier for you to manage your federal student loan debt. |
| What are the eligibility criteria? | To qualify for a Direct Consolidation Loan, you must have at least one Direct Loan or at least one federal student loan originated by a private lender (such as a bank) that is in grace, deferment, repayment or default status.
Federal student loans eligible for consolidation include Perkins Loans, Stafford Loans and PLUS Loans. |
To qualify for this special offer, you must have at least one student loan owned and serviced by the Department of Education and at least one federal student loan originated by a private lender such as a bank and serviced by that lender or another entity servicing on the lender's behalf.
While you are required to have both types of loans, only your federal student loans originated by a private lender that are in grace, deferment, repayment or forbearance status are eligible for consolidation under this program. Federal student loans eligible for consolidation include Stafford Loans, PLUS Loans and FFEL Consolidation Loans. |
| How is my interest rate calculated? |
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| What is the repayment period? | Depending on your total federal student loan balance being consolidated, you have up to 30 years to repay your new federal consolidation loan. Total Loan Debt---Repayment Period Less than $7,500---10 years $7,500 to $9,999---12 years $10,000 to $19,999---15 years $20,000 to $39,999---20 years $40,000 to $59,99---25 years $60,000 or more---30 years |
Your repayment period remains the same as your current repayment period for each loan that is being consolidated and will not be reset. |
| What are the financial benefits of consolidating? | When you extend your repayment period, you will have lower monthly payments so you can afford the things you need now.
Keep in mind that a longer repayment period increases the amount you will pay over the life of the loan since more interest will accrue during a longer repayment period. |
Since your repayment period is not being reset, you will pay less interest over the life of the loan than you would with a traditional Direct Consolidation Loan. |
| Are repayment plans available? | Yes. You can choose from a variety of repayment plans. | |
| Are there any borrower benefits? | Yes. You may be eligible for a 0.25% interest rate reduction when you repay through the Department of Education's automatic debit system. | |
| Can my consolidation loan be forgiven? | Yes. You may qualify for a Public Service Loan Forgiveness Program if you meet the additional program requirements. | |
| How do I apply? | You have several options. Department of Education for details. | A Department of Education loan servicer will notify you if you are eligible to take advantage of this program. |
| Where can I get more information? | Visit the Direct Consolidation Loan website for more information. | Visit the Special Direct Consolidation Loan website for more information. |
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