Considering Loan Consolidation?
Cal Poly offers a variety of student loans to its students. Some of these loans are federal, and some are not. When entering repayment, student loan borrowers with more than one loan type are expected to manage each loan as a separate repayment obligation. This may include making separate payments to separate lenders.
To consolidate is to borrow a new federal loan to be used to pay off existing federal loans. Please be advised that only federal student loans can be included in a federal loan consolidation. Institutional (campus-based) loans lent through Cal Poly, and/or alternative loans lent through a Stafford loan lender, cannot, for any reason, be included.
In recent years the federal government has added loan rehabilitation as a repayment option. Among other things, loan rehabilitation was designed to assist currently, and previously, delinquent student loan borrowers fix their personal credit rating. Federal regulations do not permit Cal Poly to extend federal loan consolidation to include institutional loans (non-federal loans lent to the student by Cal Poly directly). However, Cal Poly does offer loan rehabilitation to all of its institutional loan borrowers, except Robert Noyce Scholarship borrowers.
Eligible Loan Types
For a list of loan types that can be consolidated, see Eligible Federal Loan Types
Reasons to Consolidate
- To lock in to a fixed interest rate.
- To extend the repayment term - which may lower the expected monthly payment amount.
- The convenience of making only one payment to only one lender.
- To pay off past due loans.
Reasons Not to Consolidate
- Federal student loan borrowers may be forfeiting benefits that include teacher cancellation.
- Borrowers who extend their repayment period may pay more in interest over the life of the loan.
- Once consolidated, a borrower's credit report will be updated to reflect a paid in full status for all Stafford and/or Perkins loans included in the consolidation. The consolidation loan will be added to the credit report as a new debt. Borrowers with a history of repayment delinquency who wish to have all previously reported delinquencies permanently removed from their credit report should consider loan rehabilitation, instead of consolidation (see below).
For more information, see the Loan Consolidation page.
Eligible loan types
Federal and non-federal student loans (borrowers need to check with the lender of each loan they wish to rehabilitate to determine eligibility). Note: alternative loans lent through a bank may not be eligible. Check with the lender.
Reasons to Rehabilitate
- To help regain eligibility to Title IV financial aid funds.
- To help repair a personal credit rating (upon successfully rehabilitating a student loan, the negative repayment history is permanently removed from the borrower's credit report).
For more information, see the Loan Rehabilitation page.