General Questions
Applying
Repaying
Glossary
General Questions
A Federal Consolidation Loan is a part of the Federal Family Education Loan Program (FFELP) that was created by Congress to make it easier for students and families to repay their student loans. This loan lets borrowers combine their eligible federal student loans into a single loan with a low fixed-interest rate and flexible repayment options.
With a Federal Consolidation Loan you can:
- Lower your monthly loan payments by extending your repayment term
- Save money with a low fixed interest rate and rate-reducing incentives
- Simplify your monthly bill paying
- Improve your income-to-debt ratio, making it easier to qualify for credit cards and other personal loans
- Pay off your consolidation loan early with no prepayment penalties
- Take advantage of tax deductions
- Request deferment or forbearance of your loans, if necessary
In addition, applying for a Federal Consolidation Loan from VFI is simple and fast. There are no credit checks, no fees, and no co-signers required, and it takes only 15 minutes.
Learn more.
To be eligible for a Federal Consolidation Loan, you must:
- Have at least a combined $10,000 balance on two or more eligible federal student loans
- Be in the grace period or the repayment period of these loans, and not in default
- Have more than one lender for these loans (with some exceptions)
- Have not previously consolidated these loans (with some exceptions)
Learn more.
The following loans are currently eligible for a Federal Consolidation Loan:
- Federal Stafford Loans, unsubsidized and subsidized, including Guaranteed Student Loans (GSL)
- William D. Ford Federal Direct Loans, subsidized and unsubsidized (FDLP)
- Federal Supplemental Loans for Students (SLS), formerly ALAS
- Federal Perkins Loans
- Federal Insured Student Loans (FISL)
- Health Professions Student Loans (HPSL)
- Loans for Disadvantaged Students (LDS)
- Nursing Student Loans (NSL)
- Federal PLUS (parent) Loans
- William D. Ford Federal PLUS Loans (FDPL)
- Federal Consolidation Loans, unsubsidized and subsidized
- William D. Ford Federal Direct Consolidation Loans, unsubsidized and subsidized
Learn more.
The fixed interest rate for a Federal Consolidated Loan is based on the weighted average of the variable interest rates of the student loans you consolidate, rounded up to the nearest 1/8th of a percent [0.125%]. Each July, interest rates on variable rate loans are adjusted, and can even go as high at 8.25%. If you consolidate you can lock in a fixed interest rate and be assured that your interest rate will never increase.
Check interest rates.
If you consolidate your loans during an existing grace period, you can get an additional 0.60% interest rate reduction-while preserving most of your grace period. Having your monthly loan payment deducted from your checking or savings account through an automated debit program will lower your interest rate an additional 0.25% immediately. You can lower your interest rate by another full 1.0% once you make 36 consecutive on-time monthly payments.
You can reduce the monthly payments on your Federal Consolidation Loan by:
- Extending the repayment period to the maximum allowed, and by selecting a graduated repayment plan
- Applying for a consolidation loan during your loan grace period
Learn more.
There is no grace period for a Federal Consolidation Loan if you are already in the repayment period of the loans you are consolidating. However, if you apply for this loan while you are in the grace period of the loans you are consolidating, we will delay processing your application until it's closer to the end of your grace period. This delay will preserve as much of your grace period as possible.
You might be able to claim a deduction for student loan interest that you pay on your Federal Consolidation Loan. Consult IRS publication 970 and your tax advisor for details.
Typically you may consolidate your federal student loans only once. You might qualify for another Federal Consolidation Loan if you:
- Have eligible loans that you did not previously consolidate
- Returned to school and took out additional federal student loans
Applying
You may apply for a Federal Consolidation Loan online, by phone, or by mail. Using our online application and e-signature is the fastest way to apply for this loan. Alternatively, you may call our toll-free number and talk with a VFI loan counselor who will assist you throughout the application process and answer any questions you might have. Your VFI loan counselor can even fill out your loan information over the phone and then mail the application to you overnight for your signature. You may also download a PDF file of the loan application and then fax, mail, or overnight mail it to us.
To apply you'll need:
- Your Social Security number and driver's license number
- Names and contact information of at least two references
- Name and contact information of your current employer (Optional)
- A valid email address if you're applying online
- Loan and lender information for each loan you are consolidating
- Apply now.
It typically takes three to four weeks from the time you submit your application until your Federal Consolidation Loan is funded. Using an online application and e-signature can reduce the amount of time it takes to complete the process. You may call a VFI loan counselor at any point during this time to get an update on your loan.
Zero. Getting a Federal Consolidation Loan is free.
No, your credit history will not be checked.
The repayment information for each of your current loans will include the lender's name and address. You can also find this information at the National Student Loan Data System (NSLDS) web site at http://www.nslds.ed.gov. Or simply call a VFI loan counselor and we'll be happy to access your loans and provide you with the information you need.
You must make your regular payments on any current loans that are in repayment until the loan servicer for your new loan provides you with a Loan Consolidation Disclosure Statement and Repayment Schedule.
E-signature means "electronic signature." The e-signature feature conveniently allows you to "sign" an application electronically and submit it over the Internet. By using e-signature to sign your Federal Consolidation Loan application, you can greatly speed up the application process.
Repaying
You may choose one of several repayment options for a Federal Consolidation Loan. Repayment periods range from 12 to 30 years, depending on the total amount of your student loans. And there are four repayment plans designed to suit different financial needs and circumstances.
• Level Plan
With a level repayment plan, you make equal monthly payments over the term of your loan. This plan features:
- A fixed monthly payment for the duration of the loan
- Monthly payments credited to both principal and interest
- The lowest overall interest cost of all repayment options
• Two-Year or Four-Year Graduated Plan
If your current earnings are low but are expected to increase in the near term, this plan might be the best for you. It features:
- Interest-only monthly payments for the first two or four years of repayment
- Principal and interest monthly payments that begin in the third or fifth year of repayment
This plan will cost more over the life of the loan than the Level Repayment Plan.
• Extended Term Repayment Plan
If you received your first federal student loan or PLUS loan on or after October 7, 1998, and the outstanding balance of your loans is greater than $30,000, you can qualify for an extended payment plan.
This plan features:
- Monthly payments credited to both principal and interest
- A maximum repayment period of up to 25 years
• Income-Sensitive Repayment Plan
If you are experiencing financial problems or are in danger of defaulting on your loan, you might be eligible for an Income-Sensitive plan. For more information about this repayment plan, please contact a VFI loan counselor.
You can change repayment plan once per year with no fees or penalties. Just contact our loan servicer partner to change your plan.
Repayment is normally started 30 to 60 days after your loan is funded. When your loan is funded, you'll receive a Loan Consolidation Disclosure Statement and Repayment Schedule from our loan servicer partner.
There are no prepayment penalties or fees if you pay your loan off early.
Under certain circumstances, you may have a right to postpone payments on a Federal Consolidation Loan. A deferment may be available if you are:
- Enrolled in school at least half-time
- Enrolled full-time in a graduate fellowship program
- Enrolled in a full-time rehabilitation-training program for individuals with disabilities
- Actively seeking, but unable to find, full-time employment (for up to three years)
- Experiencing an economic hardship as determined by federal law (up to three years)
If you are in deferment under one of the categories listed above on the loans you are consolidating, you may reapply for a deferment with our loan servicer partner.
If you are unable to make your scheduled payments, you may be able to make a reduced monthly repayment, extend the time to make repayments, or temporarily stop making payments if you apply for forbearance. Interest charges continue to accrue during a forbearance period. A forbearance may be available if you:
- Are serving in a medical or dental internship or residency program and meet certain criteria
- Are serving in a national service position for which you receive a national service education award under the National and Community Service Trust Act of 1993
- Qualify for partial repayment of your loans under the Student Loan Repayment Program, as administered by the Department of Defense
- Have a monthly debt burden for Title IV loans that collectively equals or exceeds 20% of your total monthly gross income
Forbearance is generally granted at the discretion of the Federal Consolidation Loan servicer, and you will need to provide reason or documentation to prove your eligibility.
Once your Federal Consolidation Loan has been funded you will receive a Loan Consolidation Disclosure Statement and Repayment Schedule. This documentation will also provide you with the contact information for our loan servicer partner. The loan servicer will be able to answer all questions about your loan, help you change repayment plans, and process requests for deferment or forbearance. If you need assistance reaching our loan servicer partner, please call a VFI loan counselor and we'll be happy to help you.
Glossary
A loan payment deducted automatically from your savings or checking account each month.
Permission to temporarily suspend repayment of your student loans.
FFELP stands for Family Federal Education Loan Program. FFELP lenders are authorized by the federal government to administer federal student loans, including Stafford and PLUS Loans.
An interest rate that remains the same throughout the life of a loan. A loan with a fixed interest rate is advantageous when interest rates are currently low and expected to rise in the future.
Permission, based on need, to temporarily: a) lower your payments; b) extend your repayment period; or c) suspend payments. Interest charges continue to accrue during a forbearance period.
The period between the time you leave school (or drop below half-time status) and the time when you must begin repaying your loan.
An organization, working on behalf of a lender, responsible for collecting payments, processing deferment/forbearance forms and other correspondence, and providing customer support to borrowers.
An interest rate that may go up or down over time depending on increasing or decreasing interest rates in the market.
An average that takes into account the proportional weight of both the amounts of the loans and their interest rates.
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