Student Loan Consolidation

WHAT ARE THE BENEFITS OF DIRECT LOAN CONSOLIDATION?

Consolidation can help ease your monthly payments once you enter repayment by rolling one or more of your Direct Loans into one payment with one interest rate.

If you have more than one loan, you can combine the loans into one, fixed rate loan (see below for interest rate information). There is no minimum number of loans or balances to qualify, however, so borrowers can consolidate even a single small balance loan.

You can also have more than one consolidated loan. If you consolidated before, you may choose not to include your previously consolidated loan in your new loan consolidation. Use the calculator at www.loanconsolidation.ed.gov/borrower/
bconsol.shtml to help you determine which loans to include in your new consolidation loan.

Borrowers can choose the same standard 10-year maximum repayment term as they have with their current Direct Loan to keep the cost of borrowing low when repayment begins.

Note: In school loan consolidation is no longer an option; consolidation is only an option after you graduate.

There is no cost to consolidate.

Parents can consolidate their Federal Direct PLUS Loans.

Students can apply for Direct Loan consolidation online in as little as 8 minutes or by completing a paper form (see below).

You can receive a 1/4 percentage point interest rate reduction when you sign up for an Electronic Debit Account.

HOW ARE DIRECT LOAN CONSOLIDATION INTEREST RATES CALCULATED?

The interest rate of a consolidation loan is the weighted average interest rate on all the loans you are consolidating. Use the online calculator on the Federal Loan Consolidation website to see whether consolidation will save you money.

Federal legislation changed the interest rate structure on Federal Direct Stafford Loans and PLUS Loans from a variable interest rate to a fixed interest rate for loans received on or after July 1, 2006. The fixed interest rates for these loans are:

6.8% Subsidized & Unsubsidized Federal Direct Stafford Loans
7.9% Federal Direct PLUS Loans

The interest rate on any loans received prior to July 1, 2006 will remain variable and will change July 1 each year. For more information on Direct Loan interest rates, click here.

CONSOLIDATING OTHER FEDERAL LOANS:

If you are borrowing loans such as Perkins, Health Professions, or Nursing Loans, you can use the online calculator to see whether consolidating these loans with your Direct Loans will be to your advantage. Be aware, however, that when you consolidate, you will lose the cancellation provisions of these loans. This could be disadvantageous for certain students, such as those who plan to serve in the Armed Services, Peace Corps, etc. For Perkins Loan cancellation information, click here. For Health Professions Loan and Nursing Loan cancellation information, see your promissory note.

HOW TO APPLY FOR CONSOLIDATION:

The Direct Loan Servicer will assist you with the loan consolidation process:

The easiest way to apply for loan consolidation is through the Direct Loan Servicer using your U.S. Department of Education Personal Identification Number (PIN) at www.dlssonline.com/consolidatenow/
welcome.asp
Paper applications and information about consolidation are also available from the web at www.loanconsolidation.ed.gov or by calling 1-800-557-7392.

What you will need:

Name, address, and telephone number for two references with different U.S. addresses.
The lender name, address, and current balance information for each of the education loans that you wish to consolidate. If you apply online using your PIN at www.dlssonline.com/consolidatenow/
welcome.asp, much of this information will be already be pre-filled in for you. The View Student Loan Summary page of Wolverine Access also lists this information (select Student Business > login > Financial Aid > Aid Year > 5. Loans > View Student Loan Summary). You may also refer to your monthly Direct Loan statements, your Direct Loan Servicer account information (www.dlssonline.com), or your promissory notes. Direct Loan Borrower Services can also help you (telephone: 1-800-848-0979).
For the Education Loan Indebtedness section of the application, you will need to list for each of your loans: the loan holder, loan servicer's name, address, and telephone number.
- For Federal Direct Loans (Subsidized, Unsubsidized, PLUS) you have had while at University of Michigan, list the Direct Loan Servicer contact information available on your most recent Direct Loan Statement.
- For Federal Perkins, Health Professions, and Nursing Student Loans, you have had while at University of Michigan, list:
Student Loan Operations (Loans & Collections)
University of Michigan
6061 Wolverine Tower
3003 S. State Street
Ann Arbor, MI 48109-1287
734-764-9281

To learn how to consolidate private or alternative loans, contact your private loan lender (CitiAssist, MI-LOAN, etc.) directly. NOTE: Private educational loans cannot be included in a federal loan consolidation.