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How do I consolidate my student loans?

If you are expecting to borrow a Direct Loan for this coming year and also have Stafford Loans from prior years, you will have at least two lenders to repay when you graduate: your selected private lender and the federal government.

The Direct Lending Consolidation program offers a way for you to combine both loans into one consolidation loan and make just one payment. This loan consolidation program will be available to you once you leave school or drop to less than half time enrollment, and must begin repayment.

There are advantages and disadvantages to loan consolidation and we recommend that you research this option carefully before proceeding.  If you have questions about whether or not consolidation is right for you, please contact the Direct Loan Consolidation Loan Information Center at www.loanconsolidation.ed.gov.

Who is eligible for loan consolidation?

To qualify for a Direct Consolidation Loan, borrowers must have at least one Direct Loan or Federal Family Education Loan (FFEL) that is in grace, repayment, deferment or default status. If you received a loan while you were in school, then quit long enough for the loan to go into repayment, then you return to school, that loan cannot be included in a Direct Consolidation Loan.

What is the PUT program?

Since 2008, Stafford lenders have sold some of their loans to the Department of Education in an attempt generate revenue and provide more loans to students. This is called the Loan Purchase Commitment (PUT) Program.

As a result of this program, continuing students may have already received communication from the Department of Education explaining the purchase. These loans are not considered Direct Loans but continue to be part of the Federal Family Education Loan Program (FFELP).

It is important to note that loans in the future may not have the same servicer as loans you have borrowed already. This means that when you begin to make payments on your loans after graduation you may be making multiple payments to multiple loan servicers.

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