What is federal student loan consolidation?
Federal student loan consolidation is a loan which combines your existing eligible federal student loans into a single loan. When you apply for a Federal Consolidation Loan (FCL), you are taking out a new loan to pay off all or a portion of your original eligible federal student loans. Currently, under the Federal Consolidation Loan program, the loan has a fixed interest rate which is calculated as the weighted average of the current interest rates of the loans being consolidated, rounded up to the nearest 1/8%, not to exceed 8.25%. The repayment term can range anywhere from 10 to 30 years, depending on the amount being consolidated and the repayment options selected. What are the advantages and disadvantages of consolidating my loans? Advantages • Fixed interest rate • Lower monthly payment • Pay only one bill to one lender for all federal loans • Extend repayment period • No prepayment penalties • Multiple payment plan options Disadvantages • Increased total cost of debt due to exten
