Loan Consolidation

Consolidation allows you to lock-in the lowest possible interest rate. It also simplifies repayment by combining all your loans into one, so you can make a single payment each month.
Following is a list of commonly asked questions on consolidation.
Click on the links below to go right to the answer.

Commonly Asked Questions

BORROWER BENEFITS: Do NMSL consolidations qualify for cost savings benefits?
BORROWER ELIGIBILITY: Who can consolidate with NMSL?
CONSOLIDATION COSTS: How much does consolidation cost?
DEFERMENT & FORBEARANCE: Are deferments and forbearances still available?
DIRECT & FFELP LOANS: What are the rules on consolidating FFELP & Direct Loans?
EXISTING LOANS: What happens to my existing loans?
FORGOTTEN LOANS: What if I forgot to consolidate one of my eligible student loans?
INTEREST RATE: How is my consolidation interest rate calculated?
LENDER CHOICE: Why should I consolidate with NMSL?
LOAN ELIGIBILITY: What loans are eligible for consolidation?
LOAN LIMITS: What are the maximum/minimum loan amounts for consolidation loans?
OTHER CONSOLIDATION LENDERS: What should I do if another lender contacts me?
PAYMENT SIZE: How much will my payments be?
PERKINS LOANS: If I only have Perkins loans, can I consolidate with NMSL?
PREVIOUS CONSOLIDATION: If I have already consolidated, can I re-consolidate?
PREVIOUS DEFAULTS: If I've defaulted on a student loan, can I still consolidate?
PROCESSING TIME: How long will it take for my consolidation to be processed?
REPAYMENT PERIOD: How long will I have to repay my consolidation loan?
REPAYMENT PLANS: What payment options are available for consolidation loans?
REPAYMENT START DATE: When do I have to start repaying my Consolidation Loan?
SPECIAL INTEREST RATES:  How do teachers, doctors and nurses who work in New Mexico qualify for 1.25% interest consolidation loans?
TIMING OF CONSOLIDATION: Why should I consolidate before July 1?
UN-CONSOLIDATING LOANS: Is there a way to “un-consolidate” loans?
UNM LAW & MEDICAL STUDENTS: How will consolidation affect special benefit programs for UNM Law School and Medical School students?
ZERO-PERCENT INCENTIVES: What happens to my 0% loans if I consolidate?

• Borrowers with at least one outstanding Federal Family Education Loan Program (FFELP) college loan with NMSL.
• Borrowers with all unconsolidated Direct Loans (unsubsidized or subsidized).
• Borrowers who have previously consolidated with NMSL and now have another eligible student loan to consolidate.
• Borrowers who have previously consolidated with another FFELP lender and now have an outstanding NMSL student loan to consolidate.
• Borrowers who have previously consolidated with Direct Lending and now have an outstanding NMSL student loan to consolidate.

Who cannot consolidate with NMSL?
Borrowers who fit into any of the following categories cannot consolidate with NMSL:

• Borrowers who are currently in school.
• Borrowers wishing to consolidate or reconsolidate loans with a spouse.

LOAN ELIGIBILITY
What loans are eligible for consolidation?
To be consolidated, your loans must meet these requirements:

• Loans must be in grace period, repayment or deferment status.
• Borrowers can consolidate almost any type of education loan except LINK alternative loans or other private loans. Eligible loans include:
  • Stafford (subsidized/unsubsidized), PLUS, SLS & Consolidation loans
  • Direct Lending Stafford (subsidized/unsubsidized), PLUS & Consolidation loans
  • Federal Insured Student Loans (FISL)
  • Perkins Loans
  • Health Professions Student Loans (HPSL), including Loans for Disadvantaged Students (LDS)
  • Nursing Student Loans (NSL)
  • Health Education Assistance Loans (HEAL)

The following loan accounts are not eligible for consolidation or reconsolidation with NMSL:

• Loans having a judgment with outstanding fees
• Loans for which payment is currently being garnished
• Loans currently on a summons and complaint but without a settlement agreement

TIMING OF CONSOLIDATION
Why should I consolidate before July 1?

• Interest rates are adjusted each July 1 by the Federal government, so consolidating before this date may save you money on the life of your loan.

LENDER CHOICE
Why should I consolidate with NMSL?
New Mexico Student Loans is New Mexico's only non-profit FFELP lender. We return our excess earnings to borrowers through loan forgiveness programs and assist borrowers with money-saving benefits.

NMSL borrowers are eligible for these benefits:

• 5% Principal Reduction after 48 on-time monthly payments
• 0% Interest Stafford Loans for teachers, school counselors, librarians, MDs and nurses who work in New Mexico
• 1.25% Interest Consolidation Loans for teachers, MDs and nurses who work in New Mexico
• 0.25% Interest Reduction for Automatic Payments
• NMSL Loan Forgiveness Program for borrowers in good standing

NMSL Borrowers who consolidate with other lenders will lose their eligibility for these benefits.

EXISTING LOANS
What happens to my existing loans?
Your existing student loans are paid in full, which results in a new consolidation loan.

LOAN LIMITS
What are the maximum and minimum loan amounts for consolidation loans?
There is no minimum or maximum dollar amount you can consolidate.

REPAYMENT PLANS
What payment options are available for consolidation loans?
Borrowers can choose from several repayment schedules:

• Standard Repayment Schedule
  The borrower pays the same amount for each installment payment through the entire repayment period. The Standard Repayment Schedule cannot exceed 10 years, excluding grace, deferment and/or forbearance periods.
• Graduated Repayment Schedule
  The borrower’s installment payment amount is scheduled to change (usually increasing in two or more increments) during the course of the repayment period. The graduated repayment schedule cannot exceed 10 years (or 25 years for borrowers eligible for an extended repayment schedule), excluding grace, deferment and/or forbearance periods.
• Income-Sensitive Repayment Schedule
  The borrower's monthly payment amount is adjusted annually, based solely on his or her expected total monthly gross income from employment and other sources during the course of repayment.
• Extended Repayment Schedule
  Available to “new borrowers” – with loans originating on or after October 7, 1998 – whose outstanding principal and interest on FFELP loans totals more than $30,000. An extended repayment schedule may provide for standard or graduated installments over a period not to exceed 25 years.

REPAYMENT PERIOD
How long will I have to repay my consolidation loan?
It depends on the amount of your student loan debt. The more you owe the longer the repayment period.

Consolidation Loan Amount          Maximum Repayment Period*
Less than $7,500:                             10 years
$7,500 - $9,999:                              12 years
$10,000 - $19,999:                          15 years
$20,000 - $39,999:                          20 years
$40,000 - $59,999:                          25 years
$60,000 and above:                         30 years

CONSOLIDATION COSTS
How much does consolidation cost?
There is no application or processing fee for consolidation and no penalty for early repayment.
No credit or income verification is needed.

INTEREST RATE
How is my consolidation interest rate calculated?
The interest rate on your consolidation loan will be calculated using a weighted average of the loans to be consolidated, rounded up to the next 1/8 of a percent. It is capped at 8.25%.
The rate on your consolidation loan will be fixed for the life of the loan and is set according to federal law.
Each year they work in New Mexico, doctors, nurses, and school teachers, librarians and counselors can get their consolidation loan interest lowered to 1.25%.  See “SPECIAL INTEREST RATES” (below) for more information.

SPECIAL INTEREST RATES 
How do teachers, MDs and nurses who work in New Mexico qualify for the special 1.25% consolidation loan interest rate?
To qualify for NMSL’s 1.25% annual interest rate, your loans must be consolidated with and guaranteed by New Mexico Student Loans.  You must file for initial certification upon entering repayment and recertify annually.  Once certification is approved, your interest rate is adjusted to 1.25% for the year.

Individuals who meet the following requirements are eligible for this program:

MDs FOR NEW MEXICO:  Borrower must work fulltime as a practicing physician in New Mexico.  Click here for the MDs for New Mexico Interest Benefit Request form.

NURSES FOR NEW MEXICO:   Borrower must be employed fulltime as a registered or licensed practical nurse in a New Mexico public or private healthcare facility.  Click here for the Nurses for New Mexico Interest Benefit Request form.

TEACHERS FOR TOMORROW:  Borrower must have at least a bachelor’s degree and be employed fulltime as a classroom teacher or a fulltime provider of teaching-related educational services (such as a school librarian or guidance counselor) in a New Mexico public or private nonprofit elementary or secondary school.  Click here for the Teachers for Tomorrow Interest Benefit Request form.

PAYMENT SIZE
How much will my payments be?
Payments can only be estimated based on the approximate balance and interest rate on your outstanding loans. You will need to provide this information to NMSL in order for an estimated payment to be calculated.

REPAYMENT START DATE
When do I have to start repaying my Consolidation Loan?
In general, your first payment will be due 60 days after your loan is disbursed. However, consolidating your loans may be a lengthy process, especially if several lenders hold your loans. You must continue to make payments on your existing loans until consolidation is completed.

DEFERMENT AND FORBEARANCE
Are deferments and/or forbearances available for Consolidation Loans?
Yes. Deferments and forbearances may be available by contacting NMSL.

Deferments are available if the borrower qualifies for the various deferment options.

Some common reasons for deferment are:

• unemployment
• economic hardship
• disability
• military service
• teacher shortage
• education-related, including rehabilitation training and internship

PREVIOUS DEFAULTS
If I've defaulted on a student loan, can I still consolidate my student loans?
You must make satisfactory repayment arrangements with the holder of the defaulted loan or agree to repay the Consolidation Loan under an income-sensitive repayment schedule. But if you have loans on which a court has issued a judgment against you or upon which a wage garnishment order has been issued, you are not eligible for loan consolidation.

PREVIOUS CONSOLIDATION
If I have already consolidated my student loans, can I get a new consolidation loan?
Once you have consolidated your student loans, you can get a new consolidation loan ONLY if you have either an eligible student loan that was never consolidated or a new eligible student loan, disbursed after the date of your original consolidation.

PROCESSING TIME
How long will it take for my consolidation application to be processed?
The time for application processing will vary based on the number and type of loans you currently have.
You must continue to make payments on all your existing loans until your loan consolidation is completed.

UN-CONSOLIDATING LOANS
Once my student loans are consolidated, is there a way to “un-consolidate” them?
No. Consolidation pays off your original student loans. Once they are paid in full they cannot be re-opened. When consolidation has been completed, there is no way to reverse the process.

FORGOTTEN LOANS
What if I forgot to consolidate one of my eligible student loans?
You can only add a forgotten eligible student loan to your new consolidation loan if you add it within 180 days of the loan consolidation. If you are within the 180-day period, this won’t require a new consolidation loan.
Click here for the form.

BORROWER BENEFITS
Do consolidation loans qualify for NMSL’s cost savings borrower benefits programs?
Yes. Loans consolidated with NMSL will be eligible for the following borrower benefits:

• 5% Principal Reduction after 48 on-time monthly payments
• NMSL Loan Forgiveness Programs for borrowers in good standing
• 1.25% consolidation interest rate for teachers, school counselors, librarians doctors and nurses
• 0.25% interest reduction for automatic payment
• There are no origination fees or guarantee fees or any other administrative fees to consolidate loans.

ZERO PERCENT INCENTIVES
I’m planning to work as a teacher, MD or nurse in New Mexico. What happens to my 0% loans if I consolidate?

If a borrower has Stafford Loans (subsidized or unsubsidized) with NMSL, disbursed on or after May 1, 2000, these loans may be eligible for a 0% interest rate INCENTIVE if the borrower is employed full time in the State of New Mexico as an RN, LPN, MD, certified Teacher, school counselor or school social worker. Loans must be in standard repayment.

If you choose to CONSOLIDATE your loans with NMSL-Your consolidated loan may be eligible for a 1.25% interest rate INCENTIVE if the borrower is employed full time in the State of New Mexico as an RN, LPN, MD, certified Teacher, school Counselor or school Social Worker. Loans must be in standard repayment.

When you choose to consolidate your student loans with NMSL, you might have the option of leaving out loans that would qualify for the 0% incentive rate or combining all loans and receive the 1.25% incentive rate.

You must apply for this incentive AFTER the loans are consolidated or certification must be submitted to set the reduction. This is NOT an auto reduction. Please fill out the attached form by clicking on the link, if you feel you might be eligible.

PERKINS LOANS
If I only have Perkins loans, can I consolidate with NMSL?
No. You must have a FFELP loan from NMSL in addition to a Perkins loan to consolidate with NMSL. Perkins loans are not included in the FFELP loan program.

OTHER CONSOLIDATION LENDERS
What should I do if another lender contacts me while I am in the process of consolidating with NMSL?
Once you have started the process with NMSL, you should tell any other lender that you already are in the process of consolidating with NMSL.

FFELP & DIRECT LOANS
What are the rules on consolidating FFELP and Direct Loans?
Borrowers are no longer restricted in their consolidation options. NMSL can now consolidate any borrower's FFELP and Direct Lending loans - even if none of those loans are with us.