How long does it take for federal student loans to be consolidated?
If you're tired of making multiple federal student loan payments, consolidation might be the answer. In general, the process takes about six weeks after submitting the application. You may also consider student loan refinancing to help you manage your monthly payments.
Because consolidation typically takes at least 60 days, we encourage borrowers to submit a consolidation application as soon as possible—but no later than April 30, 2024—to ensure their consolidation loan is disbursed prior to the adjustment.
If you haven't already set up an FSA ID, please create one. Once logged in, you'll see your account dashboard. Then, scroll down to the “Loan Breakdown” section, where you'll see a list of your loans, including loans you paid off or consolidated into a new loan.
Debt consolidation loans generally have terms between one and seven years, and many will let you consolidate up to $50,000. But debt consolidation isn't the only way borrowers can use personal loans.
If you consolidate loans other than Direct Loans, consolidation may give you access to forgiveness options, such as income-driven repayment or Public Service Loan Forgiveness (PSLF). If you consolidate, you'll be able to switch any variable-rate loans you have to a fixed interest rate.
MOHELA, the loan servicer for the PSLF program, has stated that payment counts for PSLF may temporarily show zero qualifying payments. This can be really confusing for borrowers who were told they needed to consolidate their loans in order to be eligible for PSLF or to maximize their eligibility for PSLF.
Once you have made your 120th payment, submit a PSLF form to count your qualifying payments and apply for forgiveness. After we receive your PSLF form, your loans will be reviewed for eligibility for forgiveness.
You can be denied a student loan consolidation for different reasons, such as a low income, too much debt, or a low credit score.
- Because consolidation can lengthen your repayment period, you'll likely pay more in interest over the long run. ...
- You might lose borrower benefits such as interest rate discounts, principal rebates, or some loan cancellation benefits associated with your current loans.
Any borrower with ED-held loans that have accumulated time in repayment of at least 20 or 25 years will see automatic forgiveness, even if the loans are not currently on an IDR plan. Borrowers with FFELP loans held by commercial lenders or Perkins loans not held by ED can benefit if they consolidate into Direct Loans.
How long is the consolidation process?
The entire process typically takes between four and six weeks from the date your application is received. Before completing a consolidation application, carefully consider the following information to determine whether loan consolidation is the best option for you.
Loan consolidation can simplify your monthly payments by combining multiple loans into one loan. After consolidating your loans, you will only have to make a payment to one student loan servicer. This may make it easier to keep track of your student loans and help manage your finances.
Federal student loan consolidation
If you consolidate non-Direct Loans into a Direct Loan consolidation, you gain access to protections and benefits available on Direct Loans, such as Public Service Loan Forgiveness (PSLF), which can eliminate the balance of your Direct Loans after 120 qualifying payments (10 years).
The entire process typically takes between four and six weeks from the date your application is received. Before completing a consolidation application, carefully consider the following information to determine whether loan consolidation is the best option for you.
The adjustment will be applied to most borrowers' accounts in 2024. It will be applied only to Direct and FFEL Program loans held by ED. If you have commercially held FFEL or any Perkins or HEAL loans, we encourage you to consolidate them by April 30, 2024, to benefit from the payment count adjustment.
You can consolidate a consolidation loan only once. In order to reconsolidate an existing consolidation loan, you must add loans that were not previously consolidated to the consolidation loan. You can also consolidate two consolidation loans together. But you cannot consolidate a single consolidation loan by itself.
MOHELA has announced that it will be transitioning to a new loan servicing platform in order to better serve borrowers with federal student loans. If you are a borrower who has loans currently serviced by MOHELA, your loans are not being transferred or sold.
You may notice your former servicer has cleared your loan account. For example, your loan balance may come up as “paid in full” on your former servicer's website or on your credit report. This does not mean you've received loan forgiveness. This is part of the loan transfer process.
Zero balance – the Education Department may have forgiven the student loan debt, but what's more likely is that the loans were moved to a different servicer. Disappeared – the loans defaulted several years ago and fell off the report.
MOHELA is facing a class-action lawsuit from borrowers who allege the company repeatedly failed to process their PSLF applications. Come May 1, the company will no longer be the sole servicer for the loan forgiveness program as the Education Department revamps its servicing operations.
Is MOHELA considered a federal student loan?
The Missouri Higher Education Loan Authority, or MOHELA, is a student loan servicer that administers both federal and private student loans.
MOHELA is one of several companies that service federal student loans by collecting and tracking payments. Also called the Higher Education Loan Authority of the State of Missouri, it's a nonprofit servicer that manages both federal and private student loans.
In addition, parent PLUS loans aren't eligible for some other types of federal student loan forgiveness programs. To get around this, some borrowers go through two or more federal consolidations to hide the origin of the loans, then request an IDR plan. This process is often called the double consolidation loophole.
This is because a lowered credit score can make it more difficult to obtain credit and other loans in the future. In the case of consolidating your student loans, the good news is that this process can actually have a very positive impact on your credit score and it can do so almost immediately after your consolidate.
Consolidating private student loans
You typically need a credit score in at least the high 600s to qualify, and average interest rates for a refinance range from around 5% to more than 9%.
