Consolidate your Federal Student Loan Today !! Stop Wage Garnishments, Remove Default Status and Lower Your Student Repayments Today

Federal Student Loan

Direct Consolidation Loan

* What are the benefits of Federal Student loan consolidation?

It allows borrowers to combine one or more of their Federal education loans into a new loan that offers many advantages:

  1. Only one lender and one monthly bill.
  2. Flexible repayment options
    • These plans are designed to be flexible to meet the changing needs of borrowers.
    • Borrowers can switch payment plan options at any time.
  3. No minimum or maximum loan amounts or fees
  4. Varied deferment options
  5. Reduced monthly repayments
  6. Retention of subsidy benefits
    • Two possible portions to a Direct Consolidation Loan:

      • Subsidized: A loan for which a borrower is not responsible for the interest while in an in-school, grace, or deferment status. Subsidized loans include Direct Subsidized , Direct Subsidized Consolidation Loans, Federal Subsidized Stafford Loans and Federal Subsidized Consolidation Loans.
      • Unsubsidized: A loan for which a borrower is fully responsible for paying the interest regardless of the loan status. Interest on unsubsidized loans accrues from the date of disbursement and continues throughout the life of the loan. Unsubsidized loans include: Direct Unsubsidized Loans, Direct PLUS Loans, Direct Unsubsidized Consolidation Loans, and Federal Unsubsidized Stafford Loans, Federal PLUS Loans, and Federal Unsubsidized Consolidation Loans.
    • Borrowers retain their subsidy benefits on loans that are consolidated into the subsidized portion of the Direct Consolidation Loan
  7. Temporary in-school consolidation authority

* Differences Between FFEL Consolidation and Direct Consolidation.

Borrowers are encouraged to check with their existing loan holders or services to find out about consolidation options available to them.

* Who is eligible for a Direct Consolidation Loan?

Borrowers must have at least on Direct Loan of Federal Family Education Loan that is in grace, repayment, deferment, or default status.

Loans that are in an in-school status cannot be included in a Direct Consolidation Loan.

Borrowers can consolidate most defaulted education loans, if they make satisfactory repayment arrangements with their current loan holder(s) or agree to repay their new Direct Consolidation Loan under the Income Contingent Repayment Plan or Income Based Repayment Plan.

Borrowers who do not have Direct Loans may be eligible for a Direct Consolidation Loan if they include at least one FFEL Loan and have been unable to obtain a Federal Consolidation Loan with a FFEL consolidation lender or have been unable to obtain a Federal Consolidation Loan with income-sensitive repayment terms acceptable to them or intend to apply for loan forgiveness under the Public Service Loan Forgiveness Program.

Borrowers who have only a Direct Consolidation Loan cannot consolidate again unless they include an additional loan.

Even if you do not have a Direct Loan, you may be eligible to obtain a Direct Consolidation Loan

Health professional loans can be consolidated.


  • Longer repayment period,
  • Lower monthly payment, and
  • A single monthly payment

* Can PLUS loans be consolidated?


* Can a Perkins Loan be consolidated?

Yes, if borrowers include at least one Direct Loan or Federal Family Education Loan (FFEL) in their request. Perkins Loans cannot be included in a Direct Consolidation Loan by themselves. Furthermore, all Perkins Loans consolidated into the Direct Loan Program will be included in the unsubsidized portion of the Direct Consolidation Loan.

* Can loans be consolidated if still in school?

  • Yes and No.
  • Yes, if the loan is in grace, repayment, or default.
  • Not if the loan was taken after July 1, 2006, and the loan is in an in-school status.

* Can an existing consolidated loan be consolidated?

Yes, under three conditions:

  • Borrowers can consolidate existing consolidation loans into a new Direct Consolidation Loan if they include at least one other FFEL or Direct Loan into the new consolidation loan.
  • Borrowers can consolidate a single Federal Consolidation Loan if the loan is in default status or has been submitted to a guaranty agency for default aversion by the loan holder.
  • Borrowers can consolidate a single Federal Consolidation Loan if they intend to apply for loan forgiveness under the Public Service Loan Forgiveness Program.

* Can I Consolidate a Defaulted Loan?

Generally, Federal education loan(s) in default may be consolidated in a Direct Consolidation Loan if borrowers:

  • Agree to repay the loans under either the Income Contingent/Income Based repayment plan, or
  • Make satisfactory repayment arrangements with the current loan holders

If, before applying for consolidation, borrowers who want to completely clear the default notation from their credit records, they may want to consider another option: loan rehabilitation. Borrowers should contact their loan holders to obtain more information about this option.

* Borrowers in repayment who want to consolidate their Federal education loans should continue making repayment until their loan holder notifies them that their loans are paid in full.

* Spouses may no longer consolidate jointly

* Repayment Plans:

Standard: Pay a fixed amount each month until loans are paid in full.

  • At least $50/month for 10-30 years depending on total education indebtedness

Graduated Repayment Plan: Minimum payment amount will be at least equal to the amount of interest accrued monthly.

  • Payments start low and increase every two years for 10-30 years until balance is paid off
  • Based on total education indebtedness

Extended Repayment Plan: Balance must be greater than $30,000.

  • 25 years to repay
  • Two monthly repayment options:
    • Fixed monthly
    • Graduated monthly

Income Contingent Repayment Plan: monthly payments are based on income and spread over a term of 25 years

Income-Based Repayment Plan: Monthly payments are based on annual income, family size, and spread over a term of 25 years

If you consolidate more than one loan type (subsidized, unsubsidized, and PLUS) you will have one Direct Consolidation Loan with up to two parts: Direct Subsidized and Direct Unsubsidized (which includes PLUS). Even with two parts, you make only one payment a month.

* Most borrowers may change repayment plans at anytime.

* Takes between 60-90 days. The online application can reduce the amount of time it takes.

* First monthly payment will be due within 60 days of submitting the application.

* Payments can be mailed to the U.S. Dept. of Education, online, or automatically deducted each month.

* Borrowers can prepay all or part of the unpaid balance on any Direct Loan at any time, without any repayment penalty.

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