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General Questions
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
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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