Federal loan consolidation involves a number of processes and the following questions and answers aims to clarify the possible doubts.

• What is meant by Consolidating a Federal Student Loan?
  Consolidation amounts to refinancing the existing federal student loans into one single liability and thereby also reducing the monthly liability by extending the repayment term. Students and parents who avail federal loans stand to benefit by its lower monthly liability and flexible repayment option. No prepayment penalty is charged for early closure of loan.
• Who are eligible for a Federal Loan Consolidation?
  The loans to be consolidated should either be in a repayment or grace period. Defaulted loans and In-school loans do not qualify for consolidation. Where as the loans which are in the deferment period qualify for consolidation. Consolidation Loan should not be less than $25,000.
• When can I proceed consolidating?
  You can proceed consolidating your loans when all you loans are in the grace or repayment period.
• What are the eligible loans for consolidation?
  The following loans are eligible for consolidation:

• Guaranteed Students Loan (GSL)
• Subsidized and Unsubsidized Stafford Loans (SS/US)
• Federal Family Educational Loans Consolidation Loans
• Federal Perkins Loan
• Federal Nursing Loan
• Federal Insured Student Loan
• Federal Family Educational Loan PLUS Loan
• Direct PLUS Loans
• Graduate PLUS Loans
• Health Professional Students Loan
• Direct Consolidation Loan
• Supplementary Loans for Students

• Can both Private and Federal loans be consolidated together?
  Federal loan contains more favorable terms and advantages that are not available to private loan holder hence consolidation is not permitted. Both these loans can be consolidated separately.
• How is the interest rate determined?
  The interest rates are calculated on the basis of weighted average of the loans to be consolidated. The rates are mostly fixed in nature.
• What about repayment term?
  The repayment term depends on the guidelines provided by the federal government. The repayment period cannot extend beyond 30 years.
• What are the different repayment options available?
  There is a Standard repayment option under which the monthly installment remains the same and the interest component of the installment is at its minimum. Under the Graduated repayment option the monthly installment slowly increases over the period in which one would end up paying more interest. Depending on the range of loan outstanding the term can be extended under both the schemes up to 5 years.