When To Apply Federal Consolidation Loan

To apply for a Federal Consolidation Loan, your loans must be in a grace period or in repayment. Grace period: Some student loans include a grace period of six or nine months before you are required to begin repaying them. This grace period begins the day after you stop attending school at least half time. For some loan types, the government pays the interest on your behalf during the grace period. If you consolidate while in your grace period, you could be waiving (giving up) part of that grace period. This waiver is permanent, and you can't reverse it. Note: If you have variable interest rate loans, in some cases you may be able to obtain a slightly lower interest rate on your consolidation loan if you apply for the consolidation during your grace period. Be sure to check with your lender to see if you would qualify for this benefit. You can also consolidate if your loans are in a deferment or a defaulted status, but some rules may apply. Deferment: A deferment is a period of time during which your loan holder temporarily suspends your regular payments. If the loans you are consolidating are in an authorized deferment period, the deferment will end the day the consolidation is complete. If you are still unable to make payments at that time, you will need to reapply for the deferment after you consolidate. In some cases, you might not be eligible for the same type of deferments as you were before the consolidation. Default: If the loans you want to consolidate are in default, you must make special arrangements so those loans are eligible to be consolidated: Establish a satisfactory repayment arrangement with the loan holder. Your consolidating lender will set the number of consecutive, voluntary, on-time, reasonable-and-affordable, monthly payments you'll be required to make before you can consolidate. (A lump sum payment, tax offset, wage garnishment, or court-ordered payment will not count towards the consecutive monthly payments.)