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Consolidation Facts

Student loan consolidation can help you manage your debt by combining multiple federal student loans into one single loan with one monthly payment to one lender. Before consolidating your loans, you should consider whether consolidation is the best option for you. There are many advantages and disadvantages. Use a consolidation calculator to estimate your monthy payments, principal, and interest for a Consolidation Loan.

What Loans Can Be Included?
Eligible loans for consolidation include:
  • Federal Stafford Loans (subsidized & unsubsidized)
  • Federal PLUS Loans
  • Federal Perkins Loans
  • Federal Direct Loans
  • Federal Insured Student Loans (FISL)
  • Federal Supplemental Loans
  • Health Professions Student Loans (HPSL)
  • Health Education Assistance Loans (HEAL)
  • Nursing Student Loans (NSL)
There are also certain types of education loans that cannot be consolidated - alternative or private education loans, hardship, and supplemental loans funded by your college or university, Iowa Teacher Shortage Forgivable Loans, and other non-federally insured loans.

What Is the Interest Rate?
Consolidation loan interest rates are calculated by taking the weighted average interest rate of the loans being included in the consolidation and rounding up to the next one-eighth percent. The interest rate cannot exceed 8.25%. Federal Stafford Loans first disbursed on or after July 1, 2006, have fixed interest rates of 6.8%. If all of the loans to be included in a consolidation are Stafford Loans with fixed interest rates of 6.8%, the consolidation loan interest rate, rounded to the next one-eighth percent, would be 6.875%. [Calculator]

Consolidation Repayment
The repayment period varies based on the dollar amount of the loans being consolidated. Other education-related loan debt not included in the consolidation also may affect the maximum repayment period allowed. [Calculator]

 Total Education Debt  Maximum Repayment Period
$5,000 - $7,499.99 10 Years
$7,500 - $9,999.99 12 Years
$10,000 - $19,999.99 15 Years
$20,000 - $39,999.99 20 Years
$40,000 - $59,999.99 25 Years
$60,000 and above 30 Years

Can Loans Be Consolidated More Than Once?
You may be able to consolidate more than once if:
  • You did not include all existing eligible loans in the original consolidation. You will have up to 180 days after the consolidation loan is final to request that your loan holder add them, or you may obtain a subsequent consolidation loan that repays all of your outstanding eligible loans.
  • You borrowed additional loans after the original consolidation loan was finalized.
How Do I Apply?
Once you select an eligible consolidation loan provider, you will need to complete a Consolidation Application and Promissory Note. Contact the loan provider for assistance.