Student Loan Consolidation Eligibility


Virtually all federal student loans are eligible for consolidation! Even if your loan is in default you may still qualify for student loan consolidation. Also, lenders may not refuse to consolidate your loans because of the number or type of loans you want to consolidate, the type of school you attended, or government mandated low interest rates and repayment schedules. The only exception to eligibility is if a judgment or wage garnishment is already in place.

Student Loans in Default (Programs Rules)

No Fees: You will not be charged any application fees or prepayment penalties when consolidating student loans!

No Credit Checks: Consolidating student loans is a FREE government program that does not require credit checks. (Exception: PLUS borrowers are subject to a check for adverse credit history.

Payback Period The payback term ranges from 10 to 30 years, depending on the amount of education debt being repaid and the repayment option you select. Your other education loans not included in the consolidation loan are considered in determining the maximum payback period.

Interest Rates: Federal statute sets the interest rate on consolidated student loans at NO HIGHER THAN 1/8th of a percent more than the effective rate on your individual loans fixed for the life of the loan thus, you are protected from future increases in variable rate loans!

Repayment Options:

There are three basic repayment options for consolidation loans:

  1. Level-repayment - equal-installments;
  2. Graduated repayment - increases over time; and
  3. Income-based payment plans - increases/decreases based on income.

Repayment Incentives

Repayment incentives come in the form of lower interest rates and/or rebates and are based on your on-time repayment history and payment amount. Higher payments mean sooner payoff which equals better incentives.

Tax Credits*

Two federal income tax credits—dollar-for-dollar reductions in tax liability—are available for higher education expenses.

The Hope tax credit, worth up to $1,500 per student, is available to first and second year students enrolled at least half time.

The Lifetime Learning tax credit is equal to 20 percent of a family’s tuition expenses, up to $5,000, for virtually any post-secondary education and training, including subsequent undergraduate years, graduate and professional schools, and even less than half time study.

Also, interest on student loans might be tax deductible!

Note 1: . Beginning with tax year 2002, you may deduct interest paid beyond the first 60 months of repayment. For details or assistance contact a qualified tax adviser or the Internal Revenue Service at

Note 2: Married couples may consolidate their student loans into one payment however, they become jointly and severally liable for repaying the entire consolidation balance, even in the event of divorce, death or total and permanent disability of a spouse. Consider this option carefully!

Note 3: For more information on the Hope and Lifetime Learning tax credits, visit or see the IRS Publication 970, view or download the publication from the Internet at Interest