NYMC > Current Students > Office of Student Financial Planning > Debt Management Services > Consolidation


Federal loans consolidated on or after July 1, 2006 will have a fixed rate of 6.8%


When you consolidate your student loans, understand that your old loans are being repaid in full with a totally new loan. The key to deciding whether it is in your best interest to consolidate is to compare the terms of the new loan with those of your current loans. The main reason you might consider loan consolidation is to lower your monthly payments, improve/lower interest rates, take advantage of extra deferments and for convenience purposes. If you are having difficulty meeting your monthly obligations, loan consolidation may be an option to explore.

The interest rate for both Federal Consolidation and Direct Loan Consolidation is determined as the weighted average of all underlying loans being consolidated rounded to the nearest higher one eighth of one percent and fixed for the remainder of the life of the loan.  At the time the fixed rate is determined, it may never be higher than 8.25%.  Please note that older consolidation loans may have different rates, but this is the interest rate structure currently in effect for new consolidation loans.

The current avenues to consolidation are:

Federal Consolidation. Federal Loan Consolidation is offered through banks and other lending institutions. If you have borrowed educational loans from a bank, you will first need to see if the current holder of your student loans offers loan consolidation. You can find this out by calling your loan servicer. In addition, you may receive information on loan consolidation from one or more lenders. If you do not consolidate all eligible loans initially, you may add any eligible loans received before the date of consolidation to an existing consolidation loan program, provided you do so within 180 days. If a borrower has defaulted on loans, those loans cannot be consolidated unless a series of consecutive on time monthly payments are first made with lender(s) holding the defaulted loan(s). Federal Loan Consolidation is available to borrowers with Stafford Loans from either the Federal Family Education Loan Program (FFELP) or the Direct Loan program.  New York Medical College participates in the Federal Family Education Loan Program (FFELP).

Direct Loan Consolidation. Direct Loan Consolidation is available from the Federal Government and is available to borrowers who a) currently have an outstanding balance on a Federal Direct Loan, b) have outstanding FFELP loans but attended an institution that participated in Direct lending, or c) apply for FFELP consolidation but cannot find an acceptable income based repayment plan for their new FFELP consolidation loan.  New York Medical College borrowers are not eligible for Direct Loan Consolidation unless they hold a Direct Loan from a previous institution.  New York Medical College does not participate in the Direct Loan Program.

HEAL Refinancing - HEAL loans may be consolidated with Stafford Loans. However, borrowers with HEAL loans may want to refinance them together into one new HEAL loan. This can be done through HEAL refinancing or HEAL consolidation. HEAL refinancing allows HEAL borrowers to select a new lender to refinance their HEAL loans. In addition, borrowers who refinance their previous HEAL loans into a new HEAL loan do not lose their grace and deferment provisions - the eligibility for grace and deferment is renewed. With Direct Consolidation and HEAL refinancing, the deferment eligibility is renewed to its original level, even if deferments were used on original loans already. This is one of the greatest benefits of these programs. A current listing of lenders who offer HEAL refinancing can be found at the Department of Health and Human Services web site at http://bhpr.hrsa.gov/dsa/refinance/.

There are advantages and disadvantages to student loan consolidation and there are some differences between the various loan consolidation programs offered. Therefore, you may want to ask the following questions before you consolidate your student loans or before you pick a consolidation lender.  Please feel free to call 914-594-4492 or your lender for answers to these questions.

  • What is the interest rate on my new consolidation loan? 
  • How long will it take to consolidate my student loans?
  • What happens to the status of my student loans if they are in either deferment or forbearance while I am applying for my consolidation loan?
  • What repayment options are available to me with my new consolidation loan?
  • Do I have access to standard, graduated, income based and extended repayment options?
  • What is the monthly payment amount as well as the total repayment amount of my new consolidation loan?
  • Can I pay off my consolidation loan early without penalty? How are early payments applied (to principal or interest)?
  • What happens to the deferment and forbearance provisions of my student loans when I consolidate? Do I either lose or gain deferment or forbearance options when I consolidate my student loans?
  • Do I have access to ‘repayment incentives’ or ‘borrower benefits’ with my new consolidation loan?
  • Who is the servicer of my new consolidation loan? Should the lender of my consolidation loan sell my consolidation loan to another lender, will the servicer remain the same?
  • Do I lose the interest subsidy on my subsidized loans when I consolidate?
  • Which of my loans can be consolidated? Which cannot?
  • Are there any hidden fees when I consolidate? What are they?

Although married borrowers may consolidate jointly, THIS IS NOT RECOMMENDED due to the fact that the loans will no longer be forgiven in case of death or disability of one spouse.

*Please note: All terms in bold/italic appear on our Glossary page.