Understanding Plus Loan Consolidation Programs

PLUS loan consolidation is different from private loan consolidation because it involves specific government initiatives. PLUS loans are available for parents with a student in an undergraduate program or for graduate students. When you have a federal student loan, or any type of federal loan, you cannot consolidate it with other private loans. Instead, you must also go through a government process to consolidate. The following is a quick look at how to apply for consolidations and securing a new loan.


The first thing you must do to start the consolidation process is get an application. You can begin this process as soon as all the loans you need for yourself or your student have been disbursed. You do not need to wait until graduation. You can get an application online or request a form by mail from the student loan providers. In both cases, you will be filling out a consolidation promissory note. You cannot consolidate a loan in default so be sure your loan is paid up to date before you apply.

Submit Forms

After your form is complete, you need to submit it either online or by mail. You will be given information on your new loan quotes a few weeks to one month later. Remember: consolidating is using a new loan to pay off all the government loans you already have. So, you will be getting an entirely new loan quote. Once you get the quote, all you have to do is sign it to start the process. If you do not like the quote you have received, note this on the form and send it back immediately in order to stop the consolidation process.

Payoff Certificates

You will have to ensure payoff certificates have been delivered from your previous lenders in order to finalize the consolidation process. These statements will show the outstanding amounts on your other loans. If your application has been filled out correctly, the consolidation team will request these forms without you having to get involved. You need to continue making payments on your loans while this process is finalized. This can take up to two months, so make sure your loans do not go into default.

Secure New Loan

You will receive information on your new loan by mail that officially means your consolidation is complete. Your previous loans have been replaced with your new loan. Make sure to verify you do not have any outstanding payments with your previous lenders, and then you are prepared to simply pay one loan moving forward. If you sign up for auto-payments, you will not be late so try to take advantage of those services as well.

Your new lender will pay off all of your existing loans. You will immediately see this change reflected on your credit report. Since government PLUS loans do not have prepayment fees, there is no real downside to consolidating. The only thing that may not work for you is if the rates are higher than your existing loan. The government will not report your consolidation as a negative activity on your credit report like some private lenders will. In fact, the agency generally encourages consolidation of multiple loans. Since the government is only making a marginal profit off of your loan, they are more concerned with recouping the initial costs extended.

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