Consolidating federal education loans

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If your loan is in default or you have a grant overpayment and are not sure what type of loan or grant you have, check your original loan/grant documents or use our National Student Loan Data System.If the loan/grant is not one of the program types listed above and is not assigned to the U. Department of Education, the information on this site does not apply to you.Although the FFEL program is federal, it is mostly administered through state or private nonprofit agencies called guaranty agencies.Guaranty agencies pay off the lenders when borrowers default, and in turn, are reinsured by the Department of Education.Most federal loans are now made through the Direct Loan program.Federal Direct Loans are made directly by the federal government to students.The Direct Consolidation Loan program is the right choice if your goal is to simplify the process and keep your options open for the many repayment plans available for federal loans. Your rate is determined by the weighted average of the interest on the loans being consolidated rounded up to the nearest one-eighth of 1%.

Loans that are not eligible for consolidation include state or private loans that are not federally guaranteed.Lenders and guaranty agencies are not involved in the process.FFELs are guaranteed loans made by private lenders.When you consolidate student loans – either federal or private – it’s one payment to one lender, once-a-month. Loan consolidation for student loans was created to make it easier for millions of borrowers to pay off their debt.Both federal and private lenders recognize that lower monthly payments help may be the best option, if you don’t get the job you want immediately after graduating from colleges.

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