OVERVIEW
The Federal Consolidation Loan Program allows a borrower to consolidate all or part of eligible outstanding federal student loans into one new loan. This allows a borrower to have one lender, one loan and one loan payment. Borrowers should be advised that by consolidating any federal student loans they will lose all current borrower benefits offered on those loans.

BORROWER ELIGIBILITY
At the time of application, a borrower must be in a grace period or repayment status on all loans being consolidated. If the borrower has delinquent or defaulted loans, the borrower should contact the loan holder of those loans to find out if they are eligible for consolidation.

DISADVANTAGES OF CONSOLIDATING
Consolidation is not in the best interest of every borrower. Borrowers that have current borrower benefits will lose all benefits if those loans are consolidated. Additionally, while consolidation does allow for longer repayment periods and fixed interest rates, borrowers may end up paying much more in interest by extending their repayment plan.

INTEREST CHARGES
Federal Consolidation loan interest rates are fixed rates determined by the weighted average of all the loans a borrower is consolidating, rounded up to the nearest 1/8th of one whole percent or a maximum of 8.25 percent, whichever is less.

Borrowers should be advised that if they choose an extended repayment plan on their consolidation loan they could potentially end up paying much more in interest than if they had selected a standard repayment term.

APPLICATION PROCESS

1. Verify outstanding amounts. It is strongly recommended that borrowers verify their outstanding educational loan amounts with the National Student Clearinghouse (NSC) and the National Student Loan Data System (NSLDS), comprehensive databases that track all federal student loans.
   
   
2. Choose a lender. Borrowers must choose a consolidating lender with whom they can consolidate. The Michigan Higher Education Student Loan Authority offers several borrower benefits that can save borrowers money including the Michigan Advantage Consolidation Loan.
   
   According to federal regulations, an eligible borrower may consolidate loans with any eligible consolidation lender in the FFEL Program, even if the borrower's loans are held by only one FFEL holder.
   
   
3. Fill out a loan consolidation application. Once a borrower knows how much they owe on all of their federal student loans and has chosen an eligible lender, the borrower should fill out a loan consolidation application.