Consolidating loans with department of education

With a Federal Direct Consolidation Loan, which is made by the U. All, some, or just one federal student loan can be consolidated under this program.

Consolidating your federal student loans under the Direct Consolidation Loan program is one way to get out of default, though you must:make satisfactory repayment arrangements with the current loan holder before consolidating (which usually this means making three consecutive, voluntary, on-time, full monthly payments); oragree to repay the new Direct Consolidation Loan under either the Income Contingent Repayment Plan, the Pay As You Earn Repayment Plan, or Income-Based Repayment Plan.(A Direct Consolidation Loan is “made” on the date the first loan being consolidated is paid off.) Also, you can get a new Direct Consolidation Loan to combine your existing Direct Consolidation Loan or Federal Consolidation Loan with an additional eligible federal student loan (or loans) that you got before or after the date of the existing consolidation loan.An existing Federal Consolidation Loan can be consolidated into a Direct Consolidation Loan (without adding an additional loan) under certain circumstances as well.Of course, there are also downsides to consolidation.For example, consolidating certain federal student loans could cause the loss of certain benefits, such as reduced interest rates or repayment incentive programs that are available under the loans being consolidated.Also, married couples can’t combine their individual loans into in a single, shared Direct Consolidation Loan.

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