Updated: June 10, 2020

Student Loan Consolidation

Loan consolidation can simplify the student loan repayment process by allowing you to combine several types of federal student loans and repayment schedules into one. The repayment process is simplified because there is only one monthly payment. Student loan consolidation may be a great solution for you if you are looking to conveniently and easily manage multiple loans. Borrowers in default on a federal student loan are eligible for a consolidation loan if certain conditions are met. If you choose to consolidate your student loans, you can apply for a Direct Consolidation Loan through StudentAid.gov.

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Loans That Can be Consolidated

Most federal student loans, including the following, are eligible for consolidation:

Some private companies may offer to help you apply for a Direct Consolidation Loan for a fee. Be aware that these companies have no affiliation with the U.S. Department of Education or ED's consolidation loan servicers. Just like applying for scholarships, you never have to pay for help in getting a Direct Consolidation Loan.

Eligibility

To be eligible for loan consolidation, you:

Consolidation Periods

Federal loans can be consolidated during periods of repayment, grace, deferment, and forbearance. Loans cannot be consolidated while the borrower is still in school.

Advantages vs. Disadvantages of Federal Loan Consolidation

Advantages

Disavantages

Interest Rates and Fees

The interest rate for a Direct Consolidation Loan has a fixed rate for the life of the loan. The fixed rate is based on the weighted average of the interest rates on the loans at the time the borrower consolidates, rounded up to the nearest 1/8%. There is no cap on the interest rate of a Direct Consolidation Loan.

Repayment