There are no fees, no credit checks, and no pre-payment penalities on a federal student consolidation loan.The interest rate for a federal consolidation loan will be a fixed rate, which is determined by the weighted average of the interest rates on the loan(s) being consolidated, rounded to the nearest higher one-eighth of one percent.
Student loans were once guaranteed by the Federal Government, but supplied to individual students by private banks and credit unions.
Today, the Department of Education acts as its own student lender, reducing the role of private lenders.
The consolidation loan is a new loan, so the borrower needs to complete an application and a promissory note.
The borrower lists all of the various loans to be consolidated on the application.
Some agencies, once active in consolidation, have suspended lending programs, due to prevailing conditions in the student loan industry.
Alaska’s guaranty agency, The Alaska Commission on Post-Secondary Education, for example, does not currently fund consolidation loans.
By consolidating your education loan(s), your interest rate will be fixed and determined by the weighted average of the interest rates on the loan(s) being consolidated, rounded to the nearest higher one-eighth of one percent.
You may determine your interest rate by using the Repayment Estimator on the click on the Repayment & Consolidation tab.
Over the course of earning college credentials students borrow from different sources, at different times, with each loan standing on its own terms.
The result can be several required monthly payments, to multiple lenders, and loans that carry drastically different rates and conditions.
In addition to consolidation, private lenders offer incentives for on-time payment.