What is student loan consolidation?
A consolidation loan pays off multiple loans with one new loan. It may also establish a fixed interest rate for the life of the loan for any variable interest rate Stafford Loans the student may have. It is primarily a debt management tool.
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Can I consolidate my PLUS loans with my child’s Stafford loans?
No. However, you may consolidate your PLUS loans with your own Stafford loans.
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Does Edamerica offer incentives to consolidate?
Yes. You can receive 0.25% off the fixed interest rate for signing up to have your payments automatically deducted every month from a checking or savings account. If your consolidation balance is $10,000 or more, you will receive an additional 1% off the fixed interest rate after 36 consecutive, on-time payments made electronically.
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How is the fixed interest rate determined?
The interest rate is federally mandated and is determined by taking the weighted average of the loans you are consolidating and their current interest rates and rounding up to the nearest one-eighth of a percent. Stafford and PLUS loans originated after July 1, 2006 have fixed interest rates. You do not have to consolidate those loans in order to achieve a fixed interest rate.
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Can I consolidate my GradPLUS loans with my Stafford loans?
Yes. Talk to a counselor before doing this, it may not be in your best interest to include your GradPLUS with your Stafford loans due to borrower benefits you may be receiving.
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Can I consolidate my Private/Alternative loans with my Stafford loans?
No. Your Stafford loans are federal loans and you cannot include non-federal loans in a federal consolidation loan. Some lenders may claim to offer this option but the loan will not be a federal consolidation loan, instead it would likely be a credit based loan that has a variable interest rate.
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Can I receive an extended repayment term without consolidation?
Yes. If all of your loans were taken out after 10/7/1998 and you have a balance greater than $30,000 you may qualify for an extended repayment term of 25 years. This option may allow you to lower your monthly payments and preserve valuable borrower benefits. Talk to a consolidation counselor to see if this is the right option for you.
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Can I consolidate my student loans with my spouse’s student loans?
No. As of July 1, 2006 spousal consolidation was eliminated.
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Can I consolidate my student loans while I am enrolled in school?
Yes and No. If you are enrolled less than half time, and your student loans are in a grace, deferment, forbearance or repayment status you may consolidate your loans. If your loans are in an "in-school" status, they are not eligible to be consolidated. Talk to your lender to find out the status of your loans.
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Can I consolidate with any company I choose?
Yes. It is a good idea to talk to your current lender first or check with your financial aid office. There are thousands of “consolidators” with no history in student lending and no established business reputation. Remember: once you consolidate all of your loans, you cannot consolidate again unless you have loans that were not included in the original consolidation. The relationship with your consolidation company could be as long as 30 years and you want to be with a reputable company.
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When is the best time to consolidate?
If you have variable rate loans, the rate will be 0.6% lower while you are in grace or deferment. If you have fixed rate loans, you may consolidate while in grace, deferment, forbearance, or repayment.
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Why should I consolidate my student loans?
- If you need a reduced monthly payment.
- If you have multiple lenders and only want to make one payment to one company a month.
- To make managing your debt easier.
- It could improve your credit score.
- It may result in interest rate reductions.
- You could lock in a fixed interest rate.
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Why should I not consolidate my student loans?
- Consolidating prolongs the life of your loans.
- You may forfeit original repayment incentives.
- You will pay more interest over the longer repayment period.
- Loan forgiveness may no longer be an option for you.
- Military deferment might not be possible once you have consolidated.
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What will be my repayment term?
It depends on your loan balance:
| $7,500 - $9,999 |
12 years |
| $10,000 - $19,999 |
15 years |
| $20,000 - $39,999 |
20 years |
| $40,000 - $59,999 |
25 years |
| $60,000 or more |
30 years |
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Can I request a shorter repayment term?
Yes. You can request any term less than the maximum.
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Can I “reconsolidate” my student loans?
You may “reconsolidate” your student loans if you have new/old loans that were left out of your original consolidation payoff.
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How long will it take to consolidate my student loans?
With Edamerica, it will take approximately 2-6 weeks. You must continue to make any payments due until the consolidation is complete.
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Are there different repayment options?
Yes. There are several different repayment options available. Options include: level repayment, graduated repayment and income sensitive. Talk to a consolidation counselor to see what options you may qualify for.
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How are my payments applied?
In general, payments are applied first to any collection costs, second to any accrued interest, and third to any remaining principal.
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Is there a pre-payment penalty if I want to pay off my consolidation loan early?
No. You may pay off the balance of your consolidation at any time during the loan term.
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Can I still qualify for deferments and forbearances if I consolidate my student loans?
Yes. Talk to your lender to see what deferments and forbearances are available to you.
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