Consolidating federal and private student loans


Both spouses are jointly liable for the loan and both must request IBR.Problems often arise if the ex-spouses are no longer in contact.Consolidation loan borrowers should not be charged origination fees.If you already have a consolidation loan with either FFEL or Direct, you are not allowed to “reconsolidate’, except in limited circumstances.There are numerous problems that can arise–for example, if one of the divorced ex-spouses wants to apply for IBR.The Department says that borrowers with joint consolidation loans may repay under the IBR/PAYE plan as long as both spouses qualify with partial financial hardships. You can consolidate all, just some, or even just one of your student loans.



However, the interest rate may be greater than 8.25% if your consolidation application was received on or after July 1, 2013.Loans that are not eligible for consolidation include state or private loans that are not federally guaranteed.Although all of these different loans may be consolidated, you must have at least one outstanding FFEL or Direct Loan to obtain a Direct Consolidation Loan.(see box below), You can consolidate during grace periods.

This may lead to a lower interest rate on a Direct Consolidation loan, but only if you are consolidating variable rate loans. You will generally receive your first bills within 60 days after the new Direct Consolidation loan is made.

The good news is that the Department explains on its web site that if any loan you want to consolidate is still in the grace period, you can delay entering repayment on your new Direct Consolidation Loan until closer to your grace period end date.