FEDERAL STUDENT LOAN CONSOLIDATION GUIDE

OVERVIEW

A Federal Direct Consolidation Loan allows you to combine multiple federal education loans into a single loan with one monthly payment. This guide will help you understand the consolidation process, determine if it's right for you, and prepare your application.

IMPORTANT: Consolidation is permanent. Once you consolidate, you cannot undo it. Carefully review the benefits and drawbacks before proceeding.

SECTION 1: APPLICANT INFORMATION

Full Legal Name: _______________________________________________

Date of Birth: _______________________________________________

Social Security Number (Last 4 Digits): XXX-XX-____________

Current Mailing Address:
_______________________________________________
_______________________________________________
City: _________________ State: _______ ZIP: ___________

Phone Number: _______________________________________________

Email Address: _______________________________________________

Federal Student Aid ID (FSA ID): _______________________________________________

SECTION 2: CURRENT LOAN INVENTORY

Before consolidating, you must know all your current federal student loans. Log in to StudentAid.gov to view your complete loan history.

Loan Summary Table

Total Current Balance: $_______________

Weighted Average Interest Rate: _______%

SECTION 3: LOANS ELIGIBLE FOR CONSOLIDATION

Eligible Federal Loans:

☐ Direct Subsidized Loans
☐ Direct Unsubsidized Loans
☐ Direct PLUS Loans (Graduate/Professional)
☐ Direct PLUS Loans (Parent)
☐ Subsidized Federal Stafford Loans (FFEL)
☐ Unsubsidized Federal Stafford Loans (FFEL)
☐ FFEL PLUS Loans
☐ FFEL Consolidation Loans
☐ Federal Perkins Loans
☐ Federal Nursing Loans
☐ Health Education Assistance Loans (HEAL)
☐ Health Professions Student Loans (HPSL)
☐ Loans for Disadvantaged Students (LDS)
☐ Supplemental Loans for Students (SLS)
☐ Federal Insured Student Loans (FISL)
☐ Auxiliary Loans to Assist Students (ALAS)

NOT Eligible for Consolidation:

☐ Private student loans
☐ State-issued loans (unless federally guaranteed)
☐ Institutional loans from schools
☐ Current Direct Consolidation Loan (unless adding new eligible loans)

SECTION 4: CONSOLIDATION ELIGIBILITY REQUIREMENTS

General Eligibility:

☐ You have at least one Direct Loan or FFEL Program loan

☐ Your loans are in repayment, grace period, deferment, forbearance, or default

☐ You are not currently in school at least half-time (or will consolidate within 180 days of leaving school)

☐ You have not defaulted on a loan that is subject to a judgment

Default Eligibility:

If your loans are in default, you may still consolidate if you meet ONE of these conditions:

☐ You agree to repay the new consolidation loan under an income-driven repayment plan

☐ You have made at least 3 consecutive, voluntary, on-time, full monthly payments on the defaulted loan(s) before consolidating

SECTION 5: BENEFITS AND DRAWBACKS ANALYSIS

Potential Benefits of Consolidation:

☐ Single Monthly Payment - Combine multiple loans into one payment
☐ Access to IDR Plans - FFEL loans become eligible for more repayment options
☐ PSLF Eligibility - FFEL loans become eligible for PSLF after consolidation
☐ Lower Monthly Payment - Extended repayment terms may reduce payment amount
☐ Exit Default - Consolidation can remove loans from default status
☐ Fixed Interest Rate - Variable rate FFEL loans become fixed rate

Potential Drawbacks of Consolidation:

☐ Loss of Borrower Benefits - Some FFEL loans have benefits that will be lost
☐ Interest Rate May Increase - Weighted average rounded UP to nearest 1/8%
☐ More Interest Over Time - Longer terms mean more total interest paid
☐ Loss of Progress - May lose credit toward IDR/PSLF forgiveness
☐ Perkins Loan Benefits - Perkins cancellation benefits will be lost
☐ Grace Period Reset - May lose remaining grace period
☐ Permanent Decision - Cannot be undone once completed

Consolidation Decision Worksheet:

I am considering consolidation because (check all that apply):

☐ I want to simplify my payments to one servicer
☐ I want to access income-driven repayment plans not available for my current loans
☐ I want my FFEL loans to qualify for PSLF
☐ I want to get my defaulted loans out of default
☐ I want to lower my monthly payment (even if it means paying more interest)
☐ I want to switch from a variable to fixed interest rate
☐ I want to extend my repayment period
☐ Other: _______________________________________________

I understand the following may occur:

☐ My interest rate may increase slightly due to rounding
☐ I will pay more total interest over a longer repayment term
☐ I may lose progress toward loan forgiveness
☐ I will lose any borrower benefits on my current loans
☐ This decision is permanent and cannot be reversed

SECTION 6: INTEREST RATE CALCULATION

Your consolidation loan interest rate is the weighted average of the interest rates on the loans being consolidated, rounded up to the nearest one-eighth of one percent (0.125%).

Interest Rate Calculation Worksheet:

Weighted Average = (Total of A x B) / (Total Balance)

Weighted Average: _____%

Rounded to Nearest 1/8%: _____% (This will be your consolidation interest rate)

Maximum Rate: 8.25% (by law, cannot exceed this)

SECTION 7: REPAYMENT PLAN SELECTION

Available Repayment Plans:

Select the repayment plan you intend to use after consolidation:

Standard Plans:

☐ Standard Repayment Plan
- Fixed monthly payments
- Repayment period: 10-30 years (based on balance)
- Pay less interest over life of loan

☐ Graduated Repayment Plan
- Payments start low and increase every two years
- Repayment period: 10-30 years
- Good if expecting income to increase

☐ Extended Repayment Plan
- Fixed or graduated payments
- Repayment period: Up to 25 years
- Must have more than $30,000 in Direct Loans

Income-Driven Repayment Plans:

☐ Income-Based Repayment (IBR)
- 10-15% of discretionary income
- Forgiveness after 20-25 years
- Note: Most stable IDR option; created by Congress

☐ Pay As You Earn (PAYE)
- 10% of discretionary income
- Forgiveness after 20 years
- Note: Being eliminated July 1, 2028

☐ Income-Contingent Repayment (ICR)
- 20% of discretionary income or fixed 12-year payment
- Forgiveness after 25 years
- Only IDR option for Parent PLUS (after consolidation)
- Note: Being eliminated July 1, 2028

☐ Repayment Assistance Plan (RAP) - Available July 1, 2026
- Up to 10% of AGI minus $50/dependent
- Minimum payment: $10
- Forgiveness after 30 years

Parent PLUS Loan Considerations:

If you are consolidating Parent PLUS Loans:

☐ I understand that ICR is the only income-driven plan available for consolidated Parent PLUS Loans

☐ I understand that ICR is being eliminated on July 1, 2028

☐ I understand that Parent PLUS Loans (even after consolidation) are NOT eligible for IBR, PAYE, or SAVE

SECTION 8: REPAYMENT TERM BASED ON BALANCE

Your repayment term depends on your total education loan balance:

Your Total Balance: $_______________

Your Maximum Repayment Term: _______ years

Note: You may choose a shorter term than your maximum to pay less interest overall.

SECTION 9: PSLF AND FORGIVENESS CONSIDERATIONS

Public Service Loan Forgiveness (PSLF):

If you are pursuing PSLF, consider the following:

☐ FFEL Loans: Must be consolidated to Direct Loans to qualify for PSLF

☐ Payment Count Reset: When you consolidate, you may lose credit for prior payments

☐ One-Time IDR Adjustment: The deadline for the adjustment was June 30, 2024. If you did not consolidate by this date, consolidating now will reset your payment count.

IDR Forgiveness:

☐ I understand that consolidating may reset my progress toward IDR forgiveness

☐ I understand that forgiveness after 20-25 years may be taxable income (unless extended)

SECTION 10: SERVICER SELECTION

When consolidating, you may indicate a preferred servicer, but the Department of Education makes the final assignment.

Current Federal Loan Servicers (as of 2026):
- Aidvantage
- EdFinancial
- MOHELA
- Nelnet

Preferred Servicer (optional): _______________________________________________

Note: If you are pursuing PSLF, MOHELA handles most PSLF processing.

STATE-SPECIFIC NOTES

California (CA)

• California Student Borrower Bill of Rights applies to all servicers operating in California
• DFPI oversees servicer conduct and accepts complaints
• Cal Grant recipients should check impact on state aid
• California may tax forgiven debt differently than federal (consult tax advisor)

Texas (TX)

• No state income tax, simplifying some financial calculations
• Texas Higher Education Coordinating Board provides resources
• Litigation from Texas has affected some federal regulations
• Texas Workforce Commission may have relevant resources

Florida (FL)

• No state income tax
• Florida Office of Financial Regulation oversees servicers
• Florida Prepaid College Plan participants should review impact
• Strong wage garnishment protections may affect default calculations

New York (NY)

• NY Student Loan Servicer Act provides additional protections
• HESC provides resources for NY residents
• Get On Your Feet program available for qualifying NY residents
• State may tax forgiven debt (consult tax advisor)

SECTION 11: APPLICATION CHECKLIST

Before You Apply:

☐ Logged into StudentAid.gov to review all loans
☐ Calculated weighted average interest rate
☐ Reviewed benefits and drawbacks
☐ Determined which loans to consolidate
☐ Selected a repayment plan
☐ Understood impact on forgiveness programs
☐ Made copies of current loan information

Required Information for Application:

☐ FSA ID and password
☐ Personal information (SSN, DOB, address)
☐ Employer information (if choosing IDR)
☐ Reference information (2 people who know you)
☐ Income information (if choosing IDR)

Application Process:

1. ☐ Go to StudentAid.gov/consolidation
2. ☐ Log in with your FSA ID
3. ☐ Select the loans you want to consolidate
4. ☐ Choose your repayment plan
5. ☐ Provide reference information
6. ☐ Review and sign electronically
7. ☐ Submit application

SECTION 12: REFERENCE INFORMATION

You must provide two references who have known you for at least three years and who have different addresses from each other and from you.

Reference 1:

Full Name: _______________________________________________

Address:
_______________________________________________
_______________________________________________
City: _________________ State: _______ ZIP: ___________

Phone Number: _______________________________________________

Relationship to You: _______________________________________________

Reference 2:

Full Name: _______________________________________________

Address:
_______________________________________________
_______________________________________________
City: _________________ State: _______ ZIP: ___________

Phone Number: _______________________________________________

Relationship to You: _______________________________________________

SECTION 13: CONSOLIDATION CERTIFICATION

I have reviewed this consolidation guide and understand the following:

☐ Consolidation is permanent and cannot be undone

☐ My new interest rate will be the weighted average of my current rates, rounded up

☐ I may pay more total interest over the life of the loan if I extend my repayment term

☐ I may lose borrower benefits associated with my current loans

☐ I may lose progress toward income-driven repayment forgiveness or PSLF

☐ If I have Perkins Loans, I will lose cancellation benefits

☐ I understand the repayment plan I have selected and its terms

☐ I am making this decision voluntarily after careful consideration

Applicant Signature: _______________________________________________

Date: _______________________________________________

Print Name: _______________________________________________

PROCESSING TIMELINE

During Processing:
- Continue making payments on your current loans until notified
- You will receive correspondence from your new servicer
- Monitor StudentAid.gov for updates

AFTER CONSOLIDATION

Immediate Steps:

1. ☐ Confirm receipt of consolidation confirmation
2. ☐ Note first payment due date
3. ☐ Set up account with new servicer
4. ☐ Enroll in autopay for interest rate reduction (0.25%)
5. ☐ Verify correct repayment plan
6. ☐ If pursuing PSLF, submit Employment Certification Form

Ongoing Management:

☐ Make all payments on time
☐ Recertify income annually for IDR plans
☐ Update contact information if you move
☐ Monitor StudentAid.gov for account information
☐ Keep records of all payments

RESOURCES

• StudentAid.gov/consolidation - Official consolidation application
• StudentAid.gov/loan-simulator - Estimate payments and compare options
• StudentAid.gov/pslf - PSLF information
• CFPB.gov - Consumer Financial Protection Bureau
• StudentLoanBorrowerAssistance.org - National Consumer Law Center

FREQUENTLY ASKED QUESTIONS

Q: Can I consolidate just some of my loans?
A: Yes, you can choose which eligible loans to include in your consolidation.

Q: Can I consolidate private loans with federal loans?
A: No, private loans cannot be included in a federal Direct Consolidation Loan.

Q: Will consolidation lower my interest rate?
A: No, consolidation does not lower your rate. It creates a weighted average, rounded up.

Q: Can I reconsolidate my existing consolidation loan?
A: Only if you add at least one new eligible federal loan to the consolidation.

Q: How long does the process take?
A: Typically 4-6 weeks from application to completion.

This template was last updated on 2026-01-25. Consolidation rules and available repayment plans are subject to change. For the most current information, visit StudentAid.gov or consult with a qualified student loan counselor.