Federal Consolidation Loan

A Federal Consolidation Loan allows a student to combine one or more of their federal education loans into a new loan, which offers several advantages.  For example, with only one lender and one monthly payment, it is easier for the student to manage their debt. Federal consolidation loans have only one lender, the U.S. Department of Education.  When repaying a Direct Consolidation Loan, student borrowers may choose from four repayment plans:

• Standard Repayment Plan - This consolidation loan offers fixed monthly payments for a maximum of 10 years.
• Extended Repayment Plan - This consolidation loan offers fixed monthly payments, which are less than payments under the Standard Plan, with the repayment period ranging from 12 to 30 years, depending on the size of the loan.
• Graduated Repayment Plan - This consolidation loan offers monthly payments that increase every two years with the repayment period varying from 12 to 30 years, depending on the size of the loan.
• Income Contingent Repayment Plan (ICR) - This consolidation loan offers monthly payments that are based on a borrower's annual income (AGI), family size, and total Direct Loan debt.  The ICR loan is spread over a term of up to 25 years.