Federal Consolidation Loans

Program Type

Federal Family Education Loan Program (FFELP)

Purpose

The Federal Consolidation Loan Program was established to help people who borrowed money from multiple lenders or borrowed a large amount to finance their college education, who then find it hard to make the required monthly payments. If you are having trouble making the scheduled payments on your education loans, a consolidation loan from Georgia Student Finance Authority (GSFA) might be the solution. A GSFA consolidation loan:

Reduces the number of loan payments you must make each month;
Lowers your total monthly education loan payment amount;
Sets a fixed interest rate for the life of the loan;
Extends your repayment period;
Can help you avoid loan default and/or poor credit rating;
Offers several repayment options including level payments, graduated, and income sensitive repayment plans;
Charges no origination fee or service charge;
Allows you to consolidate student loans from multiple lenders into one easy to manage loan;
.50% interest rate reduction for using auto-debit.

Loan consolidation is not for everyone. Remember, even though you will have lower monthly payments, an extended repayment period will increase the total interest charges over the life of the loan. You can, however, make early payments on your loan at any time without penalty, which can save you money.

Eligibility

Have a total outstanding balance of at least $3,500 on the loans you wish to consolidate;
Have at least one loan under Georgia's Federal Family Education Loan Program (FFELP) with GSFA (Lender Code 822573);
Be in grace or repayment status (including loans in deferment or forbearance) at the time of application for the loans you wish to consolidate;
Have made satisfactory repayment arrangements with the holder of your loans or agree to repay the consolidation loan under an income-sensitive repayment plan if your loans are in a default status;
Not have another consolidation loan application pending with another lender.

Note: If you consolidate during your grace period, the remainder of your grace period will be cancelled as of the date the consolidation loan is made.

Value

The interest rate on your consolidation will be a fixed rate based upon the weighted average of all the loans to be included in the consolidation loan.
The new interest rate will be fixed for the life of the loan.
The length of your repayment term will be based upon the total education loan indebtedness as indicated on your application. The available terms are as follows:

Education Debt Repayment Period

$7,500.00 - $9,999.99 12 years

$10,000.00 - $19,999.99 15 years

$20,000.00 - $39,999.99 20 years

$40,000.00 - $59,999.99 25 years

$60,000.00 and above 30 years

Loans that can be included in the consolidation loan are:

Subsidized Stafford Loans
Unsubsidized Stafford Loans
Federal SLS Loans
PLUS Loans
Stafford Service Cancelable Loans
Perkins Loans
Federal consolidation loans*
And other Federal Education Loans

*Federal consolidation loans can only be included if you have at least one other eligible loan made before or after the existing consolidation loan that will be consolidated.

Loan Disbursement

Once the loan is approved the proceeds from your Federal Consolidation Loan will be sent directly to your lender or lenders. Shortly after disbursement, you will receive a Loan Guarantee and Disclosure Statement outlining the new loan amount, interest rates, monthly payment, and other terms.

Application Procedure

To apply, contact our customer relations department at 800-505-GSFC, or to download an application click here. Normal processing time is approximately 30 days or less. To read about recent changes to the terms and conditions of FFEL Federal Consolidated Loans by the signing of the Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Hurricane Recovery, 2006, Pub. L. 109-234 (the Supplemental Appropriations Act) pdf click here.

Other Information

Even though you will have lower payments after consolidating your loans, the extended repayment period will increase the total interest charges over the life of your loan. Also, making payments over a longer period may make it harder to save for retirement or a child's college education. However, you can make early payments on your loan at any time, which can save you money by reducing the total amount of interest paid.

Consolidation may also limit your eligibility for certain deferments and interest subsidy benefits. Generally, you should consider a loan consolidation only on a large education loan debt and if you are having serious difficulty making your payments.