How PLUS Loan Consolidation Works

We understand that the PLUS Loan consolidation process can be a confusing one. Here's a walk-through that will help you understand how it works, and why consolidating now will work for you for years to come.


The first step in the consolidation process is to apply for a Direct Consolidation Loan through the Department of Education. Applications may be submitted online, or mailed, though the online process is faster. When you apply, you will need to sign and submit a Master Promissory Note as well.

Payoff Statements

After your application has been checked for accuracy, payoff statements (called loan verification certificates, or LVCs, in the student loan industry) are requested from your existing loan holders. These statements report exactly how much you owe. Some payoff statements take up to 60 days to get back. It is very important, if you are currently making payments, to continue making payments on your existing loans until you receive your new payment information in the mail. Once you receive these payoff statements, you will have 15 days to review for accuracy or make changes.

After 15 days, your existing loans will be paid in full. This is why consolidation is a smart idea for your credit rating - it shows that you have successfully paid off all your existing PLUS Loans, which reduces the number of loans you owe, and shows you successfully paid off a series of debts, both of which increase your credit score.

New Loan

Once you receive your new payment information in the mail, you now have a new consolidated loan, in replace of your previous loans. As a precaution you should always follow up with your previous lenders to make sure your balance has been paid in full. You should allow at least 2 weeks from when you receive paperwork regarding you new loan, before you verify with your previous lenders that your accounts have been paid in full.