What is a Federal Consolidation Loan?

Paying for a college education is a costly process. But for aspiring professionals and inquisitive minds, there is no better debt to aspire to have. Statistically those who complete college earn significantly more than their less educated counterparts, over 1.8 average annual salary of a person who only has a high school degree. With a college education more of a necessity for success, a Federal Consolidation Loan can come in handy down the road.

There are many programs (PLUS Loans, Stafford Loans) to help students and parents finance the overall costs of paying for a college degree. But over time the multiple loans with their plethora of payment due dates may become overwhelming and consolidating to one lump payment may help one straighten out their financial house (please note that only a single borrower can consolidate their loans, a guardian and child’s debt cannot be merged to take advantage of a Federal Consolidation Loan).


As well as the Federal Government, many lenders offer consolidation loans. A Federal Consolidation Loan is part of the FFEL program, which manages all education loans such as the PLUS and Stafford programs. Like all loans, the borrower must contact the lender and properly apply for a Federal Consolidation Loan. After the application has been received, the review process begins and more information from the borrower’s other lenders or from its own system is gathered. The goal to calculate the actual the amount owed on the loans. ┬áThe applicant will then be notified about the consolidation loan, normal consumer disclosures, the amount owed, and where to make payments.

A consolidation loan is a great way to help organize ones finances. To take advantage of a Federal Consolidation Loan students must graduate, leave school, or drop below half-time enrollment.

PLUS loans are eligible for consolidation once they are fully disbursed.

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