Federal Consolidation Loans

 A Federal Direct Consolidation Loan allows a borrower to consolidate (combine) multiple federal student loans into one loan. The result is a single monthly payment instead of multiple monthly payments.

Federal Stafford , Grad PLUS ,  Perkins and  PLUS Loans are government sponsored low-interest loans that you can consolidate through this program.
 

Make sure to carefully consider whether loan consolidation is the best option for you. While loan consolidation can simplify loan repayment and lower your monthly payment, it also can significantly increase the total cost of repaying your loans. Consolidation offers lower monthly payments by giving you up to 30 years to repay your loans. But, if you increase the length of your repayment period, you'll also make more payments and pay more in interest than you would otherwise. In fact, in some situations, consolidation can double your total interest expense. If you don't need monthly payment relief, you should compare the cost of repaying your unconsolidated loans against the cost of repaying a consolidation loan.

You also should take into account the impact of losing any borrower benefits offered under repayment plans for the original loans. Borrower benefits from your original loan, which may include interest rate discounts, principal rebates, or some loan cancellation benefits, can significantly reduce the cost of repaying your loans. You may lose those benefits if you consolidate.
 

Once your loans are combined into a Direct Consolidation Loan, they cannot be removed. That's because the loans that were consolidated have been paid off and no longer exist. Take the time to study the pros and cons of consolidation before you submit your application.

"Who Is My Lender?"

Students and parents who borrowed Federal loans BEFORE July 1, 2010 may have multiple lenders. These borrowers may want to closely examine the benefits of consolidating their previous loans through the Direct Consolidation Loan Program.

Loyola students with Perkins Loans should contact Mrs. Tracy McLendon in our Student Loan Office with any questions or for any needed information about their account.

Under provisions of the Ensuring Continued Access to Student Loans Act, lenders have the option to "PUT" (sell) loans to the U.S. Department of Education (DOE).  Lenders must notify borrowers if their loans have been sold to the Department of Education. 

We understand that the majority of  lenders have sold their  loan portfolios to the Department of Education.

YOU WILL BE ABLE TO CHECK IF YOUR LOAN HAS BEEN SOLD BY REVIEWING   YOUR RECORDS ON THE NATIONAL STUDENT LOAN DATA SYSTEM FOR STUDENTS

  • You can access your records by  clicking on the Financial Aid Review  link on the site's home page.
  • Upon selection of any loan from the main list, the Detail Loan Information page displays. This page lists the current  Servicer / Lender / Guaranty Agency contact information for the loan.  For a FFEL purchased loan, the  "Contact" column provides information on the servicer that now will be working with the borrower.

What does this mean for Borrowers?

The vast majority of our students and parents have borrowed through lenders that utilize Sallie Mae for servicing their portfolios.

Sallie Mae will also be one of several agencies servicing loans bought by the Department of Education.

However, the information that we are currently receiving is that servicing agencies, like Sallie Mae, will not offer combined billing if they are servicing some of your loans that are owned by the Department of Education.

This means that you would have to make two separate payments each month, send in two separate deferment forms, etc.

In light of these developments,  we want to  encourage our new graduates, alumni, and parent loan borrowers to learn more about their options under the  Federal Direct Consolidation Loan Program.

In School Loan Consolidation Allowed from July 1, 2010 - June 30, 2011

Currently enrolled borrowers who have loans in the Direct Loan Program, the FFEL Loan Program (bank as a lender), and / or loans purchased by the Department under ECASLA may consolidate those loans into one loan under the Federal Direct Consolidation Program between July 1, 2010 and June 30,2011.  Follow this link for more information

 

Resources:

 

Contact information for the Department of Education's Loan Servicing Center:

Borrower services are available 8:00 a.m. to 11:00 p.m. EST, Monday through Friday

Contact information for Department of Education Loans Serviced through other agencies

Click here for contact information for other agencies that service federal student loans.

Please carefully review all correspondence that you receive from a lender. Several members of Congress are currently investigating lenders who have been accused of deceptive marketing tactics.

Other Resources

Updated October 26, 2011