Student Loan Consolidation

One way to resolve a defaulted loan is to combine your existing federal student loans into a new Direct Consolidation Loan from the US Department of Education (ED). Even if you have only one defaulted student loan, you may obtain a Direct Consolidation Loan to resolve the default.

In the process of consolidation, each original loan is paid in full and a new Direct Consolidation Loan is originated for the combined balance of the consolidated loans. ED determines the interest rate of the Direct Consolidation Loan by taking the weighted average of the interest rates on your existing loans and rounding up to the nearest 1/8 of a percent (0.125).

Eligibility Criteria

Your defaulted federal loan may be consolidated provided that it’s not a previous spousal consolidated loan and you are not subject to a judgment secured through litigation or an order of administrative wage garnishment on a federal student loan for which you’re requesting consolidation.

In order to qualify for a Direct Consolidation Loan, you must:

  • Certify at the time of application that you do not have another Direct Consolidation Loan application pending.
  • Agree to repay the Consolidation loan under an Income-Contingent or Income-Based Repayment, or make three consecutive, voluntary, on-time, full monthly payments on the defaulted loan before you consolidate it.
  • Repay in full any ineligible amount borrowed prior to the consolidation, if these were due to your error.

Eligible Loans

  • Federal Family Education Loan Program (FFELP) loans (Stafford, PLUS, SLS, and Consolidation loans)
  • Federal Perkins Loans
  • Health Professions Student Loans (HPSL)
  • Health Education Assistance Loans (HEAL)
  • Nursing Student Loans (NSL)
  • Federal Direct Loan Program (FDLP) loans (Stafford, PLUS, SLS, and Consolidation loans)
  • Federal Insured Student Loans (FISL)

Consolidation Benefits

  • You may combine multiple student loan payments to multiple loan holders into one payment to one loan holder, the Department of Education.
  • You may be eligible for deferments and forbearances, if you need them.
  • Some loans may qualify for interest subsidy during authorized periods of deferment.
  • You may select either an Income-Contingent or Income-Based Repayment
  • You may be eligible for the Public Service Loan Forgiveness Program; other eligibility criteria apply.
  • If you are a servicemember, you may receive a reduced interest rate or no accrual of interest during periods of qualifying active duty military service; other eligibility criteria apply.

Contact us to see if you qualify for loan consolidation. For more information, call Trellis Borrower Services at (800) 222-6297 or send email to