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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.

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.


To be eligible for loan consolidation, you:

  • Must have at least one federal loan that is eligible for consolidation.
  • Must be in the student loan repayment period or the grace period.
  • If the loan you want to consolidate is a defaulted loan, you must either make repayment arrangements (three monthly consecutive payments) on the loan before you consolidate, or agree to repay your new Direct Consolidation Loan under
    • Income-Based Repayment Plan
    • Pay As You Earn Repayment Plan
    • Revised Pay As You Earn Repayment Plan, or
    • Income-Contingent Repayment Plan.
  • See information about Student Loan Repayment Options here.

  • If the loan you want to consolidate is a defaulted loan that is being collected through wage garnishments, or that is being collected in accordance with a court order after a judgment was obtained against you, you cannot consolidate the loan unless the wage garnishment order has been lifted or the judgment has been vacated.

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


  • Simplifies loan repayment with one monthly bill.
  • Can lower your monthly payments by giving you more time to repay your loans.
  • Ability to switch any variable-rate loan to a fixed interest rate.


  • Extended repayment period means more repaid with interest over time.
  • Interest may accrue on a higher principal balance than might have been the case if you had not consolidated.
  • May cause you to lose borrower benefits, like interest rate discounts, principal rebates or some loan cancellation benefits.
  • Will cause you to lose credit for any payments made toward income-driven repayment plan forgiveness.

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 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.

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Last Reviewed: September 2020