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
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!
There are three basic repayment options for
- Level-repayment - equal-installments;
- Graduated repayment - increases over time; and
- Income-based payment plans - increases/decreases based
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.
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
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
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 http://www.irs.gov
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 www.ed.gov/updates/97918tax.html
or see the IRS Publication 970, view or download the
publication from the Internet at www.irs.gov/prod/forms_pubs/