Have Questions? Get Answers
Questions
Answers
1. What's a federal student loan consolidation?
A federal student loan consolidation combines all or some of your eligible federal student loans into one new loan with a single monthly payment. It doesn't matter if you have different student loan types held by more than one lender.
Federal student loan consolidation is a smart move for anyone, assuring you of the following benefits:
- Fixed interest rate for the life of your loan rather than the variable rate you currently have on your federal student loan(s)
- Reduction of your monthly student loan payment by 50 percent (done through a longer repayment term). Lengthening your repayment term, however, will increase the total amount of interest that you pay over the life of the loan(s).
- One payment each month, which means you won't have to remember multiple due dates
- No penalty is assessed for early repayment
- No credit check, no co-signers needed, and no fees imposed
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2. Why should I consolidate my federal student loans?
Top reasons to consolidate your federal student loans include:
- Lock in a low fixed interest rate for the life of your loan so you never have to worry about an interest rate increase each year on your federal student loans
- Make just one payment each month rather than writing checks on different due dates each month
- Better manage your monthly budget by lowering your payment by 50 percent and extending your repayment terms
- Simplify your finances by knowing exactly how much interest you will be paying over the life of your loan
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3. Are any fees associated with the student loan consolidation?
No, there are absolutely no fees for consolidating your federal student loans. It’s FREE!
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4. How do I know if I'm eligible to consolidate my student loans?
- You need to have at least $10,000 in eligible federal student loans
- You cannot be in default on your loans
- You must be ready to graduate from school within six months or You are currently repaying your student loans
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5. What interest rates does your company offer on a federal consolidation loan?
Interest rates are calculated exactly the same way no matter which company you choose to consolidate your federal student loans. Federal law determines the interest rate calculation. The interest rate is based on a weighted average of all of the interest rates on the federal student loans you want to consolidate and rounds up to the nearest 1/8 of a percent.
Education finance companies can offer different borrower benefits and/or interest rate discounts to further reduce the interest rate. Education Loan Options offers very competitive discounts to borrowers as a reward for on-time payments and for signing up to make consolidation loan payments using automatic debit.
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6. Am I eligible to consolidate if I'm still in school?
Yes, you can only if you have 6 months or less to graduate. We can start your application, but we will not process it until just before your grace period ends. That means that you get to keep your six-month grace period as well as benefit from consolidation right when you go into repayment.
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7. What's the grace period discount?
We offer recent graduates that are still in their grace periods and interested in consolidating their federal Stafford loans an additional discount of 0.60 percent. To save even more on your fixed interest rate, you just need to ensure you complete your consolidation process prior to the end of the 6-month grace period. That's because your consolidation interest rate is based on a weighted average of the underlying loans and the interest rate on a Stafford loan.
Note: This discount doesn't apply to other eligible consolidation loans such as parent loans for undergraduate students (PLUS), Graduate PLUS loans and Perkins loans.
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8. Will a credit check be necessary and does my credit rating affect my eligibility for a consolidation loan?
No, we don't check your credit report or verify income for a federal student loan consolidation. Department of Education guidelines do not require a credit check.
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9. Can I consolidate private or alternative education loans along with my federal student loan consolidation?
Sorry, no – only federal student loans are eligible for consolidation. However, your outstanding balance on your private or alternative education loans and ineligible federal loans such as Health Education Assistance loans (HEALs) may be considered in extending your repayment term on your federal consolidation loan.
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10. Can I consolidate PLUS loans that I borrowed for my child's education or my Graduate PLUS loans?
Yes, you can consolidate either type of PLUS loan – PLUS loan for parents of undergraduate students or PLUS Graduate loan. In fact, you can consolidate a parent loan for undergraduate students (PLUS) while your child is still in school. Doing so will lock in a low interest rate for the life of the consolidation loan. You may want to consider consolidating your PLUS even if you think you'll have to take out more PLUS loans later since you can always consolidate your new PLUS loans with your consolidation loan later on.
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11. What if I don't know who currently holds my loans?
You can find lender names and addresses on your statements for each of your loans. Otherwise, you can call us and we will look up your student loan information for you or call 1-800-4FEDAID to find out the lenders on your federal student loans.
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12. Can I consolidate a loan that's already been consolidated?
Yes as long as you:
- Have eligible federal student loans that you did not previously consolidate, or returned to school after your consolidation loan was funded and received additional eligible federal student loans
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13. Can I apply if one of my federal student loans is in default?
Sorry, but no, we can't consolidate loans that are in default. Once you are in default, it's very important that you contact your loan servicer and find out how to get out of default. Once you've worked out a repayment schedule with your loan servicer and are no longer in default, you can apply for a loan consolidation.
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14. Once I apply online, how long will it take for my application to be processed?
Once we receive the completed application, we'll immediately begin processing it. It can take 60-120 days to fully process your application, which includes verifying all of your loan information with your servicer(s) and or lender(s). Please continue making timely payments on all your loans until your consolidation loan is processed and approved. We'll let you know the status of your consolidation loan in timely fashion.
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15. Should I keep making payments on my federal student loans while I'm waiting for my consolidation loan to be processed?
Absolutely! Continue making on-time payments while your consolidation loan application is in process. Your application will take about 30 to 90 days to process. In the meantime, you're expected to make full, on-time payments to your current loan holder to avoid late penalties and possible loan default.
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16. Can my spouse and I consolidate our loans together?
Unfortunately, the Department of Education will no longer approve spousal consolidations. You and your spouse must consolidate separately,
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17. Once I have my consolidation loan, can I add any new loans to it?
Yes, you may. You may add additional eligible federal student loans to your consolidation loan within 180 days of the funding date of your consolidation loan. If you miss this 180-day add-on period, you can consolidate again with the loan you left out. This may extend your repayment term and you will have a new monthly payment and possibly interest rate.
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18. What are my repayment plan options?
You may choose one of several repayment options for your federal consolidation loan. The repayment term can have a maximum of up to 30 years depending on the total amount of your federal student loans.
Your repayment options consist of:
- Equal Payments – Allows you to pay equal monthly payments over the term of the loan. Payments are applied toward principal and interest.
- Graduated/Select 2 Payments – Allows you to make interest-only payments for the first two years of repayment. In the third year, payments increase to level installments of principal and interest payments for the remaining term of the loan.
- Graduated/Select 5 Payments – Allows you to make interest-only payments for the first two years of repayment. In the third through fifth years, payments increase to include a portion of the principal. In the sixth year, payments increase to level investments of principal and interest payments for the remaining term of the loan.
- Income-Sensitive Payments – Allows you to make payments that are adjusted annually based on your expected total monthly gross income from employment and all other sources. For spousal consolidation loans, monthly payments are adjusted according to combined monthly incomes. Your account will initially be disbursed as a Graduated/Select Payment Plan. After the consolidation loan is disbursed, you must contact our servicer to qualify. Once eligibility is determined, our servicer will calculate your new monthly payment.
- Extended Equal Payments – Allows up to a 25-year repayment term of equal payments.
Note: This extended payment plan is only available to qualified borrowers with over $30,000 in eligible federal student loans.
- Extended/Select 2 Payments – Allows up to a 25 year repayment term for graduated payments.
Note: This extended payment plan is only available to qualified borrowers with over $30,000 in eligible federal student loans.
- Extended/Select 5 Payments – Allows up to a 25-year repayment term for graduated payments.
Note: This extended payment plan is only available to qualified borrowers with over $30,000 in eligible federal student loans.
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19. How is the maximum repayment term determined for my consolidation loan?
Your total outstanding student loan debt including loans that aren't eligible for consolidation such as private education loans and Health Education Assistance loans (HEALs) is used to determine your maximum repayment term.
Total Outstanding Maximum Term
Student Loan Debt
$7,500 - $9,999 12 years
$10,000 - $19,999 15 years
$20,000 - $39,999 20 years
$40,000 - $59,999 25 years
$60,000 or greater 30 years
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20. Can I have payments automatically deducted from my bank account?
Yes, we can set up electronic transfers from your checking or savings account. We encourage you to set up automatic loan payments if you're able to.
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21. When will I have to make my first payment on my consolidation loan?
Once your loan has been funded, you will receive a loan consolidation disclosure statement and repayment schedule from the servicer of your new consolidation loan. You're required to begin repayment 30 days from the date your loan is funded, according to the schedule you receive.
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22. Can I make monthly payments for my consolidation loan online?
Yes, your new servicer does offer the option to make your monthly payment online.
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23. Can I switch later to a different repayment plan?
Yes, you may – just call your new servicer to assist you with this. There are no extra costs or penalties to switch plans, and you can do so once a year. If your loan is serviced by one of our partners, we'll help you contact them quickly and easily to process your request.
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24. Is there a penalty if I pay more than the minimum loan payment each month?
Absolutely not! In fact, the more principal you pay down, the shorter your overall loan term and interest costs will be. Any extra money you send in each month is applied directly towards the principal balance of your fixed interest rate consolidation loan, so you can pay your loan off faster.
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