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4 Important Student Loan Consolidation Questions

Can you add a Loan to an Existing Federal Direct Consolidation Loan?

Borrowers can add loans to an existing consolidation for up to 180 days after the Direct Consolidation Loan was first disbursed. If more than 180 days has passed, borrowers can apply for a new Direct Consolidation Loan. The new consolidation loan can include the original Direct Consolidation loan and must include another eligible outstanding Federal education loan.


Can you consolidate your loans that are in grace?

Yes, Borrowers who consolidate loans that are in grace may receive a lower interest rate on their Direct Consolidation Loans if they are consolidating variable rate loans. However, once grace status loans are consolidated borrowers lose any remaining grace period. Borrowers receive their first bills within 60 days after the new Direct Consolidation Loan is made.

Can you consolidate jointly with your spouse?

No, Effective July, 1 2006 a married couple may no longer obtain a Direct Consolidation Loan as joint borrowers.


How is the amount of your payment calculated under the ICR Plan?

The ICR Plan is designed to keep payments affordable. Generally, you pay the lesser of:

  • the amount you would pay if you repaid your loan in 12 years, multiplied by an income percentage factor that varies with annual income, or
  • 20 percent of your discretionary income (AGI minus the poverty level for your family size)

Under the ICR Plan, the monthly payment is $0 for borrowers with family incomes that are less than or equal to the U.S. Department of Health and Human Services poverty level for their family size. Borrowers whose calculated monthly payment is greater than $0 but less than $5 are required to make a $5 monthly payment. Other borrowers must pay the calculated monthly payment.