Home > Financial Aid > Student Loans > Student Loan Consolidation

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 StudentLoans.gov.

To be eligible for a Direct Consolidation Loan, you:

Must have at least one federal loan that is eligible for consolidation
Must be in the student loan repayment or the grace period
Must either make acceptable repayment arrangements before you consolidate, or you must agree to repay your new Direct Consolidation Loan under one of the income-driven loan repayment plans if your student loan is in default.
Must have your wage garnishment lifted or have the judgement vacated if your defaulted student loans are being collected through garnishment of your wages.

Loans that can be consolidated

Direct Subsidized and Direct Unsubsidized Loans
Subsidized and Unsubsidized Federal Stafford Loans
Direct PLUS Loans
PLUS loans from the Federal Family Education Loan (FFEL) Program
Federal Nursing Student Loans
Supplemental Loans for Students (SLS)
Federal Perkins Loans
Health Education Assistance Loans (HEAL)
Some existing consolidation loans

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.

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. If you want to consolidate a defaulted loan, you have to either make satisfactory repayment arrangements on the loan with your current loan servicer before you consolidate or repay your new Direct Consolidation Loan under the:

Income-Based Repayment Plan (IBR)
Income-Contingent Repayment Plan (ICR)
Pay As You Earn Repayment Plan (PAYE)
Revised Pay As You Earn Repayment Plan (REPAYE)

Advantages vs. Disadvantages of Federal Loan Consolidation

Advantages

One Monthly Payment
Lower Monthly Payments
Longer Repayment Period
Fixed Interest Rate

Disadvantages

Greater Total Money Repaid - Interest accumulated over a longer period when repayment period is extended.
Loss of Borrower Benefits - Borrower loses cancellation benefits on Perkins Loan. Interest rate discounts and principal rebates can also be lost.

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

Repayment begins within 60 days of the loan disbursement
Payback term ranges from 10-30 years depending on the amount of educational debt being repaid and selected repayment options
Loans can be repaid in a shorter amount of time is borrower chooses to do so
Once consolidated, federal loans cannot be unconsolidated

Latest College & Financial Aid News

Scholarship Deadlines Extended Due to COVID-19

April 2, 2020

by Izzy Hall

Just as schools have closed their doors due to coronavirus, charities and non-profit organizations have had to shutter down. While they might suspend board meetings, community fundraisers or award ceremonies, chances are they haven't shut down their scholarship offerings - in fact, many non-profits have extended their scholarship application windows from mid- or late March into April, May or even June. If you've been applying for scholarships this spring and missed out on some March or early April deadlines, check your account - you may find that some scholarships have had their due dates pushed back, giving you more time to submit an application. [...]

Coronavirus News Update for Students, Families, Colleges

March 31, 2020

by Susan Dutca-Lovell

From student loans to college athletics, Scholarships.com is keeping you updated on all of the latest information on the coronavirus pandemic and its impact on high school and higher education. If you're tired of reading about COVID-19, take a break by checking out your latest scholarship matches and earning money for college here. [...]

Coronavirus Impact on SAT, ACT, and AP Testing

March 26, 2020

by Susan Dutca-Lovell

As a high school student in the midst of the standardized testing season and living through the COVID-19 pandemic, you may be wondering what the future holds for standardized test scores, AP courses, and the college admissions process. A recent survey conducted by The College Board revealed than 91 percent of 18,000 polled enrollees still want to take their AP tests. In fact, in 900 pages of comments responding to the AP survey, AP students "begged to be allowed at least one championship bout with an AP test." [...]