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Should I Consolidate my Federal Loans?

A few years ago, almost every law graduate consolidated his/her Federal loans to extend the repayment period beyond the maximum ten-year repayment term and to lock in the low variable interest rate for the life of the loan.  These reasons no longer exist.  Federal loan borrowers can get up to 25 years to repay their loans under several repayment plans and the interest rates on those loans are fixed. 

The reasons a borrower might consider consolidating are:

  • A borrower has FFELP loans that are ineligible for the Federal Public Service Loan Forgiveness Program or the new Pay As You Earn Repayment Plan, as only Federal Direct Loans and Federal Direct Consolidation loans are eligible for each.
  • A borrower needs a Federal loan disbursement after 10/1/11 to be eligible for PAYE.  A consolidation loan will satisfy the disbursement requirement as long as the consolidation does not include a loan borrowed prior to 10/1/07.
  • A borrower has several Federal loan servicers and is required to write several loan repayment checks each month.  Consolidating will result in one Federal loan monthly payment.

Borrowers should be cautioned not to consolidate their Federal loans in a private loan consolidation as this will result in a loss of all the Federal loan benefits, i.e., deferment/forbearance, income driven repayment options/cancellation, etc. 

For information and the Federal loan consolidation application, go to  As part of the applicatoin process, you may choose your Federal consolidation servicer (FedLoan Servicing, Great Lakes, Nelnet or Sallie Mae).  You may also select a repayment plan, and if applicable, complete the electronic Income-Based Repayment (IBR), Pay As you Earn (PAYE) or Income Contingent Repayment (ICR) Plan request as part of the Direct Consolidation Loan process.