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Understand consolidation repayment terms

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Interest rate

Note: Even though after consolidation you will have one loan, if you are consolidating subsidized and unsubsidized loans, they will be tracked separately. If you decide to return to school or enter into another deferment period, the subsidized portion of your consolidation loan retains the benefit of having the interest paid for you during that time. The only exception to this rule is a Federal Perkins Loans. If you consolidate Perkins Loans, they are included in the unsubsidized portion of the Consolidation Loan and do not retain their interest benefits.

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Repayment period

Consolidation extends your repayment period from the standard 10 years up to 30 years, depending on the total amount of your educational loan debt.

Maximum Repayment
$7,500 - 9,99912 years
$10,000 - 19,99915 years
$20,000 - 39,99920 years
$40,000 - 59,99925 years
$60,000 and higher30 years

While increasing the repayment period reduces monthly payments, it increases the amount of interest you will pay. You will pay more interest over the life of the loan, unless you increase your payments or prepay the loan (which you can do without penalty) once your financial situation improves.

Use the consolidation worksheet to estimate your monthly payments, principal, and interest, and compare this to your existing loan payments.

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Payment Plans

When you begin repayment, your loan holder offers several flexible payment options:

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Repayment example

You have the following loans you're considering consolidating:

Loan A: $2,625 balance, 4.13 percent interest
Loan B: $3,500 balance, 5.2 percent interest
Loan C: $5,500 balance, 6.1 percent interest
Loan D: $5,500 balance, 6.8 percent interest

If you consolidate these loans (a total of $17,125), you'll have 15 years (180 months) to repay your Consolidation Loan. The weighted average interest rate of the loans is 5.839 percent. This is rounded up to the nearest 1/8th of one whole percent, resulting in your fixed interest rate of 5.875 percent.

If you repay your Consolidation Loan under an equal payment plan, your monthly payment will be $143.36. In the end, you will have paid $25,804.18, which includes $8,679.18 in interest.

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Repayment tips

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