Loan ConsolidationAs plans are made for repaying student loans, students may be considering loan consolidation as an option. Consolidation allows students to pay off some or all of their existing student loans by combining them into a single, large loan. There are two types of consolidation programs for education loans:
1. Federal Consolidation Loans
- Fixed interest rate based on a weighted average of the current rates on existing loans
- Deferment options predetermined by federal regulations
- Cannot include non-federal (private) loan funds
2. Private Consolidation Loans
- Can include both federal and non-federal student loan funds
- Usually a variable interest rate
- Forbearances available only at the lender's discretion
Any consolidation loan is likely to significantly increase the total amount of interest that is required. If students are unable to meet their current monthly repayment obligations, it may be best to avoid consolidation. View more information regarding loan consolidation.
Elementary or secondary school teachers may be eligible for special deferment options and, in some cases, cancellation of a portion of their student loan debt. Eligibility requirements are available at the Department of Education.
Defaulting on Student Loans
Resolving Loan Repayment Disputes
If students have a dispute with their servicer or another agency regarding repayment of federal student loans, they may consider contacting the Federal Student Aid Ombudsman for assistance. Contact the Ombudsman's office by phone at 877-557-2575 or by mail at this address:
U.S. Department of Education
830 First Street, NE
Washington, DC 20202-5144
For more information, check out the Quick Reference Guide on Repaying Student Loans.