Direct consolidation loans are now the only type of federal student consolidation loan.

Under the Direct Loan Consolidation Program, you can consolidate Subsidized and Unsubsidized Stafford Loans, Supplemental Loans for Students (SLSs), Federally Insured Student Loans (FISLs), PLUS Loans, Direct Loans, Perkins Loans, Health Education Assistance Loans (HEALs), and just about any other type of federal student loan.

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.

consolidating personal school loans-23

(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.

As you weigh the pros and cons, keep in mind that timing is critical.

With just a few exceptions, you get only one chance to consolidate with the government loan programs.

The Department strongly encourages borrowers to apply on-line, but you may also download and print a paper application to submit by regular mail. Prior to July 1, 2006, married borrowers could choose to consolidate federal student loans from both spouses or jointly consolidate the loans of either spouse.

The Department provides the following contact information if you have questions: If necessary, you can also try calling the general Student Loan Support Center at 1-800-557-7394. Both borrowers had to agree to be jointly and severally liable for repayment.

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.

The interest rate must not exceed 8.25% for consolidation loans prior to July 2013.

However, the interest rate may be greater than 8.25% if your consolidation application was received on or after July 1, 2013.

There are numerous problems that can arise–for example, if one of the divorced ex-spouses wants to apply for IBR.