What is loan consolidation, and how do I begin the process?

Student loan consolidation is a useful tool that can be used to combine existing Federal student loans into a single loan with one monthly payment. University of Iowa institutional loans are not eligible for consolidation.  Consolidation is not for everyone.

Consolidation loans offer a fixed interest rate and the possibility for lower monthly payments by extending the repayment period. However, the interest rate may be slightly higher and borrowers normally pay more in interest over the life of the loan by extending the repayment period. Borrowers could also lose some benefits on existing loans by taking out a new consolidation loan that does not offer those same benefits.

Some things to consider before consolidating:

• Some subsidized loans (not accruing interest in school or during most deferment periods) become unsubsidized (accrues interest from date of issue) when consolidated.
• What deferment options are available before and after consolidation? 
• Federal Perkins loans offer forgiveness provisions that may not be available under a consolidation program.

Borrowers should research and understand all of their options before making this important decision on whether to consolidate their loans. To determine if loan consolidation would benefit you, review the information provided at www.studentaid.gov/loan-consolidation.