Loan Terms, Fees, and Limits Interest rates for consolidation loans are fixed. This means that none of the federal consolidation or repayment programs available to the the student will apply to the portion of their debt that is technically owned by the parents. The good news is that the Department explains on its web site that if any loan you want to consolidate is still in the grace period, you can delay entering repayment on your new Direct Consolidation Loan until closer to your grace period end date. If you have an eligible loan that was not included in the first consolidation and you include that loan in the new consolidation. The Department provides the following contact information if you have questions: This process works much the same way as any loan refinance—you will essentially be taking out a new loan that is used to pay off the balances of your old loans. However, the latter interpretation appears to be the correct interpretation, meaning that only the more recent Federal Parent PLUS loans may qualify for income-contingent repayment through consolidation and only if the borrower did not enter repayment on any federal education loans prior to July 1, There are still many borrowers struggling with joint consolidation loans. Many borrowers consolidate their loans and pursue Public Service Loan Forgiveness, which is not necessary if you already have federal Direct Loans. If you are interested in private loan consolidation, click here to skip down. You can read the full eligibility rules for PSLF here. You may get an interest rate break, especially if you have variable rate loans. If the former interpretation applies, a borrower with Federal Parent PLUS loans entering repayment prior to July 1, might qualify for income-contingent repayment by consolidating the loans into a Federal Direct Consolidation loan that enters repayment on or after July 1, They may also be eligible for non-federal loan repayment and loan forgiveness programs. Consolidation can still be useful, but must be considered carefully. They are also eligible for income-contingent repayment ICR , an earlier version of income-based repayment.
You must select a servicer. How to Compare Rates and Choose a Lender. If your child is approved for the refinance, the lender will pay off current PLUS loans and issue a new loan with its own terms and conditions and, potentially, a lower interest rate. Many borrowers consolidate their loans and pursue Public Service Loan Forgiveness, which is not necessary if you already have federal Direct Loans. You can consolidate all, just some, or even just one of your student loans. The fixed rate is based on the weighted average of the interest rates on the loans at the time of consolidation, rounded up to the nearest one-eighth of a percentage point. Perkins loan cancellation eligibility is lost by consolidating these loans. Not surprisingly, this caused a lot of problems for borrowers and Congress eliminated the program as of July 1, Public service loan forgiveness forgives the remaining debt after ten years of full-time employment in a public service job for borrowers who repay their loans under the income-contingent repayment, income-based repayment, pay-as-you-earn repayment or standard repayment plans. It is a good idea to do this even if you just think that you might want to use the public service cancellation program. The longer you take to repay the loan in full, the more you will pay in interest. Private student loans, also known as alternative student loans, are non-federal loans that are not guaranteed or funded by the federal government. Federal parent education loans, such as the Federal Parent PLUS loan, are not eligible for income-contingent repayment, income-based repayment or pay-as-you-earn repayment. However, if you have private loans, you may want to think about consolidating these loans into a new private consolidation loan. The sooner your payments start counting toward the ten year cancellation period, the better, or Military service members are also allowed to re-consolidate to take advantage of the limits on interest accrual for Direct Loans. Additionally, your child may qualify for a reduced interest rate and monthly payment. She enjoys traveling, playing with makeup, biking and trying new food. However, once you consolidate, you lose any remaining grace period. Both borrowers had to agree to be jointly and severally liable for repayment. The problems arise when parents ask their student to pay back the loans that are now in their name. Choose loans and servicer. They are also eligible for income-contingent repayment ICR , an earlier version of income-based repayment. The good news is that the Department explains on its web site that if any loan you want to consolidate is still in the grace period, you can delay entering repayment on your new Direct Consolidation Loan until closer to your grace period end date. The Department of Education says it is trying to place borrowers with multiple Direct loans with a single servicer. In fact, you end up with a slightly higher rate as explained above.
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