Loan Consolidation Information
Loan consolidation involves combining several student or several parent education loans into one loan from a single lender, which is used to pay off the balances on the single education loans.
The following loans are eligible for consolidation:
- Federal Direct Stafford
- Federal Perkins
- Previously Consolidated Federal Loans
- Federal PLUS
- Federal Health Professions (HPSL)
The following loans are ineligible for consolidation:
Private loans (e.g. Partnership, Wells Fargo Collegiate, & Citi Assist Loans)
Note: Private loans can be refinanced but can not be consolidated with any federal loans. Students should contact the private lender for more information.
Starting the Consolidation Process
Students who are graduating have multiple consolidation options. However, if the student consolidates once they are out of school, they forfeit what is left of their grace period and enter immediate repayment.
To begin, the student should locate their loan history at www.nslds.ed.gov.
- This site lists all of the federal loans (Stafford, Perkins, HPSL) that the student has borrowed
- The site requires the student to enter their Department of Education PIN
- On the NSLDS site, the student should enter through the "Financial Aid Review" link to view their loans
- To find their lender information for consolidation, the student should click the yellow number in front of each loan
- To consolidate with Direct Loans, the student may select from one of the following methods:
To consolidate with a FFELP lender:
- The student should contact the particular lender for information on their consolidation process
- If the student consolidates with a FFELP lender while in school or in their grace period, they will forfeit their remaining grace period unless they complete question #26 (Grace Period End Date) on the FFELP application
If the student has consolidated loans before:
- They must determine whether or not adding new loans to the previous consolidation loan is a good decision
- The student can determine their payments under both situations with the Direct Loan Consolidation Calculator
- In some situations, adding new loans with an old consolidation may be to the student's benefit
- Each student will have a different situation, so it is very important to research the best option
- When completing the consolidation application online or with a paper application, the student will be asked information about the types of loans they have. The chart below lists the different types of loans and what their loan codes are for a Direct or FFELP Consolidation Loan Application.
If the student has only attended Iowa State University or another direct lending school and wishes to consolidate
their Direct Loans:
- They will list loan type "D" for their Direct Subsidized Stafford Loans or "L" for their Direct Unsubsidized Stafford Loans
- They will list those loans as type "A" for Subsidized Stafford Loans or "G" for Unsubsidized Stafford Loans
|Types of Education Loans and Their Codes|
|SUBSIDIZED LOANS||Direct Code||FFELP Code|
|Subsidized Federal Stafford Loans||A||SS|
|Guaranteed Student Loans (GSL)||B|
|Federal Insured Student Loans (FISL)||C||FISL|
|Federal Direct Stafford Loans||D||DSS|
|Federal Direct Subsidized Consolidation Loan||E||DSCON|
|Federal Perkins Loan||F||PERK|
|National Direct Student Loans (NDSL)||M|
|National Defense Student Loans (NDSL)||N|
|Subsidized Federal Consolidation Loans||O||SCON|
|UNSUBSIDIZED LOANS||Direct Code||FFELP Code|
|Unsubsidized Federal Stafford Loans||G||US|
|Federal Supplemental Loans for Students (SLS)||H||SLS|
|Unsubsidized Federal Consolidation Loans||J||UCON|
|Federal Direct Unsubsidized Consolidation Loan||K||DUCON|
|Federal Direct Unsubsidized Stafford/Ford Loan||L||DUS|
|Auxiliary Loans to Assist Students (ALAS)||P|
|Health Professions Student Loans (HPSL)||Q||HIPSL|
|Health Education Assistance Loans (HEAL)||R||HEAL|
|Parent Loans for Undergraduate Students (PLUS)||T||PLUS|
|Federal Direct PLUS Loans||U||DPLUS|
|Federal Direct PLUS Consolidation Loans||V|
|Nursing Student Loans (NSL)||Y||NSL|
|Loans for Disadvantaged Students (LDS)||Z|
|Other education loans ineligible for consolidation||W||OTHR|
If the student would like to cease receiving "prescreened" offers of student loan consolidation from multiple lenders, they may call toll-free 1-888-567-8688 or go to www.optoutprescreen.com. This will prevent lenders from sending the student offers based on their credit report.
Important Questions to Ask
Does the consolidation plan charge me to consolidate? What is the minimum loan amount needed?
- Never pay anyone to consolidate your loans
- The majority of plans are free!
- Direct Loans allows students to consolidate only one Direct Stafford Loan
- Some plans require a minimum amount borrowed, like $5,000 or $10,000, before the borrower can consolidate
Can I select my own repayment plan? Are there any penalties for early repayment?
- Most consolidation programs offer multiple repayment plans to choose from
- Some plans lock borrowers in to a repayment term based on their loan amounts, and make it difficult to repay their loans sooner
- When comparing repayment terms from different companies, be wary of terminology that sounds similar, but is not exactly the same
- Not all repayment terms are created equal!
What incentives does the plan offer?
- Many consolidation programs offer rebates for signing up for direct debit billing
- Other programs may have additional benefits
- Consider how long it takes to achieve these benefits before consolidating
- If it takes three or four years to receive the benefit, the deal may not be the best
- Can incentives be revoked if you miss a payment later?
- If it sounds too good to be true, it probably is!
Do I have loans that could be discharged or forgiven at a later date?
- Certain professions, like teachers, lawyers, or those enrolled in the military, may be eligible to have part of their Stafford or Perkins Loan debt forgiven
- If the students qualifies for loan forgiveness, they should not consolidate their eligible loans, as the loans cannot be removed from the consolidated loan to be individually forgiven
To contact a consolidation lender for further information, the following addresses are available:
Direct Lending Servicing Center
Borrower Services Department
P.O. Box 5609
Greenville, TX 75403-5609
Iowa State University
0880 Beardshear Hall
Ames, IA 50011