Consolidating federal and private student loans together
Borrowers in default may also consolidate in certain circumstances.Consolidation was previously available to borrowers while they were still in school. Congress also eliminated joint consolidation for spouses, effective July 1, 2006.APPLYING FOR DIRECT LOAN CONSOLIDATION All borrowers must now apply for Direct Loan consolidation using the web site. It is very important to review this sheet and check to make sure all of the loans you wanted to consolidate are included in the new consolidation loan.(Click espanol to find a Spanish version of the on-line application). Be sure to meet the deadline for responding if you think there are problems with the consolidation or if you have decided you do not want to go forward.Loans that are not eligible for consolidation include state or private loans that are not federally guaranteed.Although all of these different loans may be consolidated, you must have at least one outstanding FFEL or Direct Loan to obtain a Direct Consolidation Loan.The interest rate must not exceed 8.25% for consolidation loans prior to July 2013.However, the interest rate may be greater than 8.25% if your consolidation application was received on or after July 1, 2013.
You may consolidate with Direct Loans during grace periods, once you have entered repayment, or during periods of deferment or forbearance.
(see box below), You can consolidate during grace periods.
This may lead to a lower interest rate on a Direct Consolidation loan, but only if you are consolidating variable rate loans. You will generally receive your first bills within 60 days after the new Direct Consolidation loan is made.
There are numerous problems that can arise–for example, if one of the divorced ex-spouses wants to apply for IBR.
The Department says that borrowers with joint consolidation loans may repay under the IBR/PAYE plan as long as both spouses qualify with partial financial hardships.
Direct consolidation loans are now the only type of federal student consolidation loan.