Eligible and Ineligible Federal Student Loans
If you wish to consolidate your student loans, your loans need to be eligible for qualification under consolidation. Not all loans are considered eligible for consolidation. Let us take a look at the eligible and ineligible federal student loans for consolidation of loan debt.
Eligible Student Loans
This is a list of some of the eligible loans that can be considered for consolidation:
• Subsidized Federal Stafford Loans, previously Guaranteed Student Loans (GSL)
• Direct Subsidized Stafford Loans
• Federal Parent Loans for Undergraduate Students (PLUS)
• Federal Supplemental Loans for Students (earlier known as Auxiliary Loans to Assist Students (ALAS) and Student PLUS Loans)
• Unsubsidized and Non-subsidized Federal Stafford Loans
• Direct Unsubsidized Stafford Loans
• Federal Perkins Loans, formerly National Defense / National Direct Student Loans (NDSL)
• Direct PLUS Loans
• Health Professions Student Loans (HPSL)
• Federal Insured Student Loans (FISL)
• Loans for Disadvantaged Students (LDS)
• Health Education Assistance Loans (HEAL)
• Federal Nursing Loans
• Subsidized Federal Direct Loan
• Un-subsidized Federal Direct Loan
• Federal Supplemental Loan for Students (SLS)
Some of these loans have a very low interest rate already. So consider them carefully before consolidating else you might end up paying higher interest rates after consolidation. This is a matter to which you should give careful thought.
Ineligible Loans
There are some types of loans that cannot be included in your loan consolidation. These are:
- Non Federal Student Loans: Any student loans that have been taken from a private bank, credit unions, or any other financial institution; are not eligible under the federal student loan consolidation program.
- School Loans: Any education loans taken from your school, college, or educational institution are ineligible for consolidation.
- Personal Loans: Loans taken from any family member, friend, or other acquaintances are not eligible for consolidation even if such loans were taken for the purpose of education.
- Consumer Loans: If a student takes any loan for personal use such as for buying a car, etc; from any bank or institution, then such loans do not qualify for consolidation.
- Federal Primary Care Loans also do not qualify for consolidation of loans as these loans have a service obligation.
Eligibility of the Person
In addition to the above, there are some criteria that a person applying for the loan also has to fulfill. These are:
Minimum Amount: Depending on the lender you choose, you have to have at least $7500 to $10000 in student loans to be eligible for consolidation.
Grace Period: After leaving school or college, you have some time before you have to pay off your student loans. This is called the grace period after which the repayment period starts. Only those who are in this period can apply for student loan consolidation. If you are still in school, you are not eligible for consolidation.
Number of Lenders: If all your student loans are taken from a single lender, then you may not take a consolidation loan from any other lender; unless your lender does not offer good terms for consolidation.
Kind of loans: To be able to consolidate your student loans, you need to have loans that are eligible for consolidation as per the above list.
If you have eligible federal student loans and you are eligible too, then it could be to your advantage to apply for a federal student consolidation loan. This program may help you to reduce your monthly payments and also help you to better manage your student loans. However, always put careful thought into any form of loan application, including consolidation, and ensure that it will work in your financial favor.
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