A consolidation loan combines several student or parent loans into one loan from a single lender, which then
pays off the balances on the other loans.
Consolidation loans are available for most federal loans, including FFELP (Stafford, PLUS and SLS), FISL, Perkins, Health Professional Student Loans, NSL, HEAL, Guaranteed Student
Loans, and Direct loans.
In certain circumstances (for example, when one or more of the loans was being repaid in less than 10 years because of
minimum payment requirements), a consolidation loan may decrease the monthly payment without extending the overall loan
term beyond ten years. In effect, the shorter-term loan is being extended to 10 years.
The total amount of interest paid will increase unless the borrower continues to make the same monthly payment as before, in which
case the total amount of interest paid will decrease. The interest rate on consolidation loans is the weighted average of the interest rates on the loans being consolidated,
rounded up to the nearest 1/8 of a percent and capped at 8.25%.
To find out more about loan consolidation, visit FinAid.
Student Financial Aid
220 North 7th Street
150 Tirey Hall
Indiana State University