Are all loans eligible for consolidation?

The short answer is No.   In fact when my wife consolidated her loans five years back four of her 13 loans were not included.  If you were like me, it was a frustrating experience as you do consolidation to get one loan payment.  However  the good news  though is that most federal loans are eligible for consolidation.  Here is a list of what does qualify and some common exceptions to the rule:

-Direct Subsidized Loans

-Direct Unsubsidized Loans

-Subsidized Federal Stafford Loans

-Unsubsidized Federal Stafford Loans

-Direct PLUS Loans

-PLUS loans from the Federal Family Education Loan Program (FFELP)

-Some existing consolidation loans*

-Federal Perkins Loans

-Federal Nursing Loans

-Health Education Assistance Loans

-Supplemental Loans for Students (SLS)

Examples of loans that are not eligible are private loans and defaulted loans in certain situations

As noted, for defaulted loans, it depends on the situation.  Under the following conditions you are able to consolidate a defaulted loan:

a)The borrower agrees to repay the loan under one of the Income-Driven Repayment Plans (IBR, Pay As You Earn, Income-Contingent)


b)The borrower makes payment arrangements with the current servicer of the loan.

However in the following scenarios a defaulted loan cannot be consolidated:

a)A judgement has been issued against the defaulted loan


b) The consolidation does not include at least one additional eligible loan

Consolidation loans also depend on the situation.  You are able to include your consolidation loan into a new loan if it meets one of these three conditions:

a)You are including at least one other FFEL or Direct Program Loan into the new consolidation

b)If the borrower intends to apply for loan forgiveness under Public Service Loan Forgiveness.  Loans must be Direct Loans to apply for forgiveness.

c)If a consolidation loan is in default status or has been submitted to a guaranty agency for default aversion by the loan holder.   Remember though this consolidation must include at least one more eligible loan.

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