Loan Consolidation & Forgiveness

Loan Consolidation

If you’re struggling with making multiple loan payments to different lenders/servicers each month, loan consolidation may be right for you. This federal program lets you combine multiple federal student loans into 1 new loan—with 1 monthly payment.

Consolidating your federal student loans may help you to stay on track with your monthly payments and avoid the risk of student loan default—which can have serious consequences on your credit and your income. 

Here’s what you should know about loan consolidation:

• Eligibility:
  • Most federal education loans can be consolidated. Visit studentaid.gov for a list of loans eligible for consolidation.
  • Nonfederal student loans (like VSAC student & parent loans) are not eligible for federal loan consolidation.
  • You may apply for loan consolidation if your loan is in a grace period, deferment period, or repayment status.
  • If your loan is in default, you’ll need to meet certain requirements before you can proceed with loan consolidation.
• Benefits:
  • Loan consolidation simplifies your loan payments.
  • You can make smaller monthly payments by spreading them out over more time (up to 30 years).
  • You may have access to even more repayment options after loan consolidation.
  • You can switch any loans with variable interest rates (rates that change over time) to a fixed interest rate (rate that stays the same for the life of the loan).      
• Drawbacks:
  • You’ll pay more interest over the life of your loan if you take more time to pay it back. Learn more about how interest works > 
  • Your benefits may change.

To get started, go to studentaid.gov. Once you log in, you can fill out a free loan consolidation application online—or download the paper application to fill out and send in by mail.

Keep in mind:

If you have both federal and nonfederal loans, you will likely still have more than 1 servicer after loan consolidation. Your federal loans will move to 1 new consolidated loan under 1 servicer. But your nonfederal education loan—such as VSAC student & parent loans—will remain with its current lender. 

Loan Forgiveness

In certain situations, your student loan may be forgiven, cancelled, or discharged. This means you no longer have to pay back the money that you borrowed—and your debt is erased.

Loan forgiveness is reserved for very specific situations, such as if:

• Your school closes down while you are enrolled or soon after you withdraw
• You become totally and permanently disabled
• The student or parent borrower dies
• You file for bankruptcy (in rare cases)
• You're employed in certain public service jobs and have made a minimum number of payments
• You're a teacher in a low-income elementary or secondary school or educational service agency (in certain situations)

To take advantage of this option, you must qualify for a specific loan forgiveness program such as Teacher Loan Forgiveness or Total and Permanent Disability. To learn more, visit the U.S. Department of Education’s Federal Student Aid website. 

Beware of Loan Consolidation & Forgiveness Scams 

Unfortunately, there are companies that prey on people who need help with their student loans—and try to make money off of them. You should never pay for help with a loan consolidation or forgiveness. Your lender will help you for free.

Visit studentaid.gov to learn more about avoiding scams >