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:
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 http://www.studentloans.gov 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.