Almost all types of federal loans can be consolidated.Borrowers should have loan account numbers, estimated payoff dates and contact information for each of their loans’ holders ready.
When it comes to consolidation, the types of loans you have matters, but most federal loans, including Stafford, Perkins, Direct Plus and Supplemental loans, can be consolidated with other federal student loans.
“The interest rate on (federal) consolidation loans is an average of the interest rates on the (federal) loans you’re consolidating,” says Ken O’Connor, director of student advocacy for Fynanz, a New York City firm providing technology for the private student loan market.
“With (our student loan program), if the borrower makes 12 months of on-time principal and interest payments, they can request to release the co-signer,” he says.
“That creates tremendous flexibility, especially for families applying for loans for multiple kids.” Students consolidating federal loans can do so through the Department of Education’s website at Loan gov, by phone at (800) 557-7392 or by downloading a paper application at Loan gov/borrower/and mailing it in.
But borrower protections and repayment options on private consolidation loans can vary wildly from lender to lender.
Betsy Mayotte, director of regulatory compliance for the student debt assistance group, American Student Assistance, makes sure to tell borrowers to stay away from consolidation loans that combine federal and private loans.
Know that you might need a higher credit score if you want the best rates without a co-signer.
Federal consolidation loans come with borrower protections private lenders may not offer.
It also means if you’re a new grad with little credit history, you might need a co-signer to be eligible.