Changes to Student-Loan Terms - CONSOLIDATION LOANS

   
Recent Changes to Student-Loan Terms

Federal legislation has made several changes in federal student-loan programs terms. The following are highlights of the major changes.


Consolidation Loans

Loan consolidation permits federal student-loan borrowers to bundle multiple student loans into a single loan, and depending on the borrower’s total education debt, extend the period for paying back the loan.

In-school consolidation. You no longer may consolidate your student loans while you still are attending school at least half time. The law eliminated a provision that had permitted you to request that your loans enter repayment early. You now will have to wait until you are in the grace period after you leave school (or drop below half-time enrollment) or in repayment on your loans before you may consolidate them.

Spousal consolidation. Spouses no longer may include their loans in a single consolidation loan.

Reconsolidation. With a few exceptions, if you already have consolidated your loans, you may not obtain a subsequent consolidation loan. The exceptions are that you subsequently take out a loan eligible to include in a consolidation loan, that you decide to include additional eligible loans within 180 days after receiving your consolidation loan, or that you decide to add eligible loans that you did not include in the original consolidation loan. The law added another exception that permits borrowers with Federal Consolidation loans to obtain a Direct Consolidation loan for the purpose of obtaining income-contingent repayment, but only if the lender has requested assistance from the loans' guarantor to help the borrower avoid default.