Loan Repayment

Consolidation Information

In general

Eligible Loans

• Federal student loans include Stafford, Perkins, Grad PLUS, PLUS and SLS.
• You may consolidate undergraduate federal loans with your law school federal loans.
• If interested in the public interest or PAYE, REPAYE, or IBR forgiveness plans, do not include a parent PLUS in the consolidation (Grad PLUS is fine) or the loan will not be eligible.

Perkins Loans

• You may wish to consolidate for the convenience factor but consider carefully whether or not it outweighs the fixed 5% interest rate. Depending upon the weighted average, it may or may not alter the consolidated fixed interest rate.
• There are some cancellation options related to the Perkins loan that may benefit you if you qualify (see https://www.mycampusloan.com/ ). If you consolidate you will lose these cancellation benefits.
• You will pay more interest over the life of the loan if you consolidate the Perkins loan because the repayment period is 10 years and consolidation will extend this timeframe.
• If you consolidate through lenders other than Direct Loans, the subsidized interest benefit for periods of deferment will no longer exist.
• Depending upon when you consolidate, you may lose most of the 9 month grace period. You have 180 days in which to add another loan to your consolidation loan.

Grad PLUS

• May be consolidated with your Stafford loans and eligible for public interest loan forgiveness (private loans are not).
• The interest rate is higher than the Stafford Loans. Consolidation will most likely reduce the Grad PLUS rate somewhat but raise the overall Stafford rate. Amount dependent upon the weighted average – see Calculators below.
• Note: A parent PLUS loan that is consolidated or paid off by consolidation would make all loans within that consolidation ineligible for the PAYE, IBR plan, and federal loan forgiveness. If interested in PAYE, REPAYE, or IBR loan forgiveness, do not consolidate a parent PLUS loan. A Grad PLUS is eligible.

Private loans

• If you have private (credit based) student loans, you cannot consolidate your private loans with your federal loans, but you may list them for total student loan indebtedness purposes – it will extend your repayment period.
• Although you cannot consolidate private loans (Sallie Mae, Chase, Citibank, Discover, etc.) with your federal loans, there are some organizations out there encouraging you to do so. We strongly advise against this because it will convert your federal loans into a commercial loan and you will lose the federal deferment and forbearance options and federal tax benefits.
• If you want to consolidate your private loans from different lenders together after graduation, you may do so.  Consolidating your private loans together may not fix the interest rate (if a fixed rate is offered, it is typically fairly high); it simply provides a consolidation of two or more separate lender bills into a single lender statement.
• Along with a credit check, you may end up paying origination fees and more interest or lose some deferment options that may be offered by specific private lenders. But you may be able to find a better variable interest rate and improved repayment options.

Direct Loan consolidation considerations

• Direct Loans are eligible for public interest loan forgiveness after 120 on-time payments in eligible public interest work.
• Direct Loans are eligible for REPAYE loan forgiveness after 25 years for graduate/professional loans (20 years for undergraduate loans), Pay As You Earn (PAYE) loan forgiveness after 20 years, Income Based Repayment (IBR), or Income Contingent (ICR) loan forgiveness after 25 years. At this time any balance forgiven is taxable except under Federal Public Interest Loan Forgiveness.
• If you consolidate with Direct Loans and need a deferment, any subsidized portion of your loan will not accrue interest.
• All your law school federal Stafford loans are through Direct Lending so the application process is simple.

Direct Loan consolidation application and information

Other consolidation lenders

• Some private lenders offer repayment incentives in addition to the .25% automatic debit reduction that are attractive, such as a 1% interest rate discount after 20 to 48 month on-time payments or a 5% principle reduction, depending on the lender. These incentives are lost if payments are late and the benefit may be revoked under certain deferment situations.  These days most of these lenders have eliminated these incentives and many lenders who used to offer consolidation no longer do so.
• If you consolidate with a private lender, the Direct Loan origination fee rebate you received at disbursement (prior to July 1, 2012) will be added back in to your loan balance.

Recent college graduates

• If you are no longer enrolled in school, you may consolidate through Direct Lending or through another lender in the FFEL program.
• If you did not consolidate previously, you may consolidate during your grace period or during repayment. Your loan will come due within 60 days after it is booked.
• Student loans may be deferred while enrolled at least half-time.
• If interested in the public interest forgiveness programs, you should consolidate with Direct Loans and may do so for the purposes of loan forgiveness.