The eligible loans listed on the application are paid off by the consolidation loan.The application may be completed online, on paper, or over the phone (restrictions apply).This grace period is designed to allow students to find their feet financially before repayment commences.The amount of a students monthly payment and the duration of the payment schedule will be determined when the loan is initially approved.
Once you consolidate, you are locked into a loan with a fixed interest rate. Therefore, if you consolidate your variable interest rate loans and the interest rates drop the following year, you have "locked" into the higher interest rate for the life of the loan.
Lower Monthly Payment Consolidation loan monthly payments are lower because the repayment period is longer.
Loss of Deferment and Forgiveness Benefits You may not be eligible to receive the same deferments on your Consolidation Loan that you were eligible to receive on your original loans.
So, what sets Federal student loan programs apart from private lenders and other types of loans?
Because Federal loans are funded by or guaranteed by the Federal government their interest rates are significantly lower than student made by private lending institutions.