Planning

Important Information

Federal Direct Consolidation Loan Information

Some students/graduates find that consolidating their federal student loans is a good idea. As a Direct Lending institution, Earlham College provides you with information about the Direct Consolidation Loan.

What is a Direct Consolidation Loan?

It is a loan, which combines one or more of your federal student loans into one, new loan.

There are advantages for borrowers including potential lower fixed interest rates, longer repayment terms, and the ability to rebuild damaged credit by consolidating defaulted student loans. Benefits such as in-school deferments and forbearance provisions apply to consolidation loans.

Advantages are offset by the potential higher total interest paid due to the longer term of the loan. Additionally, cancellation/forgiveness provisions are lost. Repayment begins 60 days after the Direct Consolidation Loan is disbursed. Borrowers applying for a consolidation loan while in their grace period are encouraged to apply for their consolidation loan in the 3rd month of their grace period so that their grace period is not lost.

Who is eligible for a Direct Consolidation Loan?

If you are out of school and you have at least one Direct Loan (DL) you are eligible. Those who are out of school and do not have a DL but do have a Federal Family Education Loan (FFEL) can get a Direct Consolidation Loan if they cannot obtain a Federal Consolidation Loan from a FFEL lender or cannot get one with acceptable income-sensitive repayment.

Students in school can get a Direct Consolidation Loan if they are attending a Direct Lending School at least one-half time and have at least one DL or FFEL that has not been in repayment. Students not attending a Direct Lending school can get a Direct Consolidation Loan if they have at least one DL and include a DL or FFEL that has never entered repayment.

What loans can be consolidated in a Direct Consolidation Loan?

Most Federal Title IV student loans including all Direct Loans, Federal Stafford Loans, Perkins Loans, etc can be consolidated. Some loans, the Perkins Loan for example, cannot be consolidated by students currently in school.

Where can I obtain additional information?

Call the U.S. Department of Education at 800/557-7392 or go to www.loanconsolidation.ed.gov. It is important for you to get all the facts about consolidation loans before making your decision to ensure that you make the best decision for your situation.