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									FIRST                                         for Medical Education
Financial Information, Resources, Services, and Tools
                                                                                               Association of
                                                                                               American Medical Colleges

Consolidating Your Loans
Borrowers can combine multiple federal student loans with various repayment schedules into a single
loan – either a FFEL or Direct Consolidation Loan. Simpler is not always better, though, and the decision
to consolidate must be made carefully.
Pros and Cons of                          • All Stafford and Perkins loans           When Does Repayment
Consolidating Your Loans                     can be consolidated during the          Begin on a Consolidation
Once made, a federal consolidation           grace period (near the end of
                                             grace) and once repayment
loan cannot be “undone.” Weigh the                                                   Repayment on a consolidation loan
advantages and disadvantages before          begins, which includes deferment
                                             or forbearance. However, note           will begin within 60 days of disburse-
taking the step to consolidate.
                                             that if you consolidate Perkins         ment of the loan, unless the borrower
Pros:                                        loans, several valuable benefits will   qualifies for a deferment or forbear-
• You will have the convenience              be lost.                                ance. Consolidation loans, like all fed-
   of one loan servicer for all
                                          • Federal PLUS loans can be con-           eral education loans, do not have a
   consolidated loans.
• Your monthly payment might be              solidated once they’ve been fully       prepayment penalty, so a consolida-
   lower, possibly improving your            disbursed.                              tion loan can be paid off early with-
   monthly cash flow.                     • Consolidation loans can be               out incurring a penalty.
• You will receive a fixed interest          reconsolidated provided you add a
   rate.                                     loan, or loans, that have not previ-        Interest Rates for
• You can take a longer time to              ously been consolidated.                    Consolidation Loans
   repay – up to 30 years – depend-
   ing on the amount of education         If you’re in default on a federal              The interest rate for both Direct and
   debt being repaid and the repay-       student loan, you may still be eligible        FFEL Consolidation Loans is fixed for
                                          for consolidation if you meet certain          the life of the loan and is based on the
   ment option selected.
                                          repayment requirements. Contact                weighted average of the interest rates
Cons:                                                                                    on all of the loans you consolidate.
                                          your loan holder for details.
                                                                                         The Department of Education publish-
• Although monthly payments may
                                                                                         es the Federal Student Loan Interest
  be lower, total repayment could         Requesting a Consolidation                     Rate and Consolidation Fact Sheet,
  be much higher if you extend            Loan                                           which will provide you with further
  repayment beyond 10 years.              Although most FFELP lenders no                 details and current interest rates.
• Accrued interest will capitalize        longer offer Consolidation loans, the
  when you consolidate.                   Direct Loan program continues to               Before You Start…
• You will most likely lose borrower      offer a Consolidation loan. For more
  benefits – such as interest rate dis-                                                  Check out the Consolidation
                                          information, contact the Direct Loan
  counts or principal rebates.                                                           Checklist
                                          Origination Center's Consolidation
                                          Department at 1-800-557-7392 or                For additional details and step-by-step
NOTE: Ask your servicer to “run the
                                                  guidance, check out the Department
numbers,” using all of your eligible
loans before you make a decision.                                                        of Education’s full description of
                                          If interested in a FFEL Consolidation          consolidation loans as well as its
                                          loan, check with your lender.                  Consolidation Checklist.
Which Loans Can Be
Consolidated…and When?                                                                   See Related Topics:
Most federal education loans are                                                         Loan Repayment Choices
eligible for consolidation:                                                              Delaying Repayment During Residency
                                                                                         Income-Based Repayment

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