Apply for a Federal Consolidation Loan

When to apply

To apply for a Federal Consolidation Loan, your loans must be in a grace period or in repayment.

Grace period: Some student loans include a grace period of six or nine months before you are required to begin repaying them. This grace period begins the day after you stop attending school at least half time. For some loan types, the government pays the interest on your behalf during the grace period. If you consolidate while in your grace period, you could be waiving (giving up) part of that grace period. This waiver is permanent, and you can't reverse it.

Note: If you have variable interest rate loans, in some cases you may be able to obtain a slightly lower interest rate on your consolidation loan if you apply for the consolidation during your grace period. Be sure to check with your lender to see if you would qualify for this benefit.

You can also consolidate if your loans are in a deferment or a defaulted status, but some rules may apply.

  • Deferment: A deferment is a period of time during which your loan holder temporarily suspends your regular payments. If the loans you are consolidating are in an authorized deferment period, the deferment will end the day the consolidation is complete. If you are still unable to make payments at that time, you will need to reapply for the deferment after you consolidate. In some cases, you might not be eligible for the same type of deferments as you were before the consolidation.
  • Default: If the loans you want to consolidate are in default, you must make special arrangements so those loans are eligible to be consolidated:
    • Establish a satisfactory repayment arrangement with the loan holder.
    • Your consolidating lender will set the number of consecutive, voluntary, on-time, reasonable-and-affordable, monthly payments you'll be required to make before you can consolidate. (A lump sum payment, tax offset, wage garnishment, or court-ordered payment will not count towards the consecutive monthly payments.)

Back to top

How to apply

Applying for a Federal Consolidation Loan is a multi-step process that might take four to six weeks to complete. Until the process is complete, you must continue making payments on the loans you wish to consolidate.

Generally, the loan application process works as follows:

  1. You complete a Federal Consolidation Loan Application and Promissory Note and submit it to the consolidating lender.
  2. The consolidating lender sends a Lender Verification Certificate (LVC) to your loan holder(s) as listed in your application. The loan holder completes the form and returns it to the consolidating lender.
  3. Once the consolidating lender has all of your LVCs, they will send you a repayment option letter. This letter includes the estimated principal balance, interest rate, and repayment period of your Consolidation Loan. NOTE: You can cancel all or a portion of your Consolidation Loan at this time.
  4. Your consolidating lender will send payoff funds to your current student loan holder(s).
  5. You will receive a repayment schedule and disclosure statement. This document contains important information such as the consolidating balance and summary of your repayment terms, including your first payment due date. Shortly thereafter, you should receive a monthly billing statement for the Consolidation Loan.
  6. You have 180 days once the consolidation is completed to add any eligible loans you may have missed into the consolidation loan. This might change your repayment term and interest rate.

Back to top