The Stafford loan is a federal student loan that is offered to eligible undergraduate students that are enrolled in schools that participate in the Direct Loan program.  Under the direct loan program, funding comes directly from the federal government and all repayment plans are paid directly to the federal government.  The Department of Education is responsible for administering the direct loan program.

Students that have a Stafford Loan are eligible for a Federal Stafford Loan consolidation.  To apply for a Federal Stafford Loan Consolidation, the borrower must contact the Department of Education and complete an application.  There is an option for borrowers to either apply on-line or request an application over the telephone.  Once an application is completed and submitted, the lender will request information from the borrower’s other lenders or from its own system to determine the amounts outstanding on the borrowers loans.  The borrower will then receive notification about the federal Stafford loan consolidation decision, normal consumer disclosures, the amount owed, and where to make payments.

Federal Stafford consolidation loans have fixed interest rates that are based on the weighted average of the interest rates on the loans being consolidated. A lender can provide a new consolidation loan borrower with the lowest statutory weighted average interest rate for loans by using the lower of the weighted average of the interest rates on the loans being consolidated as of July 1 or the date the lender received the borrower's consolidation loan application. The lender should apply a consistent method of determining when a student loan consolidation application is received.

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