Consolidating numerous federal student loans into one single loan is referred to as student loan consolidation. While debt consolidation will not cut your interest rates, it will allow you to lessen your monthly payments or access other repayment plans. Learn how private and federal student loan consolidation can help you, how to consolidate student loan rates, and weigh the pros and drawbacks before making a decision.

What is Student Loan Consolidation?

Combining numerous federal loans into a single direct consolidation loan is possible through student loan consolidation. Borrowers can streamline the bill-paying process, cut their monthly payments, and find a repayment plan that meets their needs by applying via the U.S. Department of Education’s Federal Student Aid office. Consolidation is an alternative to loan rehabilitation for borrowers who have fallen behind on one or more federal student loans.

Private student loans are not eligible for consolidation, although the majority of federal student loans are. Your consolidation loan’s interest rate will be a weighted average of your existing debt rates. Filing an application and debt consolidation are always free.

Should I Consolidate My Student Loans?

In general, only federal loans are eligible for student loan consolidation. Refinancing is an option for both federal and private loan debtors. Consolidation can help reduce and simplify monthly payments for borrowers with federal student loans. It’s also a great method to get more repayment options and borrower protections, rehabilitate a defaulted loan, or otherwise alleviate the stress of debt repayment.

Refinance vs Consolidation

Borrowers can consolidate numerous federal student loans into one federal student loan through student loan consolidation. Although consolidation reduces many loans into a single streamlined payment, it will almost certainly raise the amount of interest you pay over time, implying that consolidation will not save you money. Instead, the process lengthens your repayment period, reducing your monthly payment while raising the total interest you’ll pay.

The practice of consolidating several private and/or federal student loans into a single private loan is known as student loan refinancing. Refinancing, as opposed to consolidation, allows borrowers to cut their interest rates, which can result in significant savings over the life of the loan. Nevertheless, if you refinance student loans with a private loan, you will not be eligible for federal loan protections, repayment options, or forgiveness programs.

Pros of Consolidating your Student Loans

  • A longer repayment period
  • Simplified payment procedure
  • Reduced monthly payments
  • The capacity to convert a variable-rate loan to a fixed-rate loan
  • Other repayment plans, such as graded and IDR plans

Cons of Consolidating your Student Loans

  • A longer repayment period means paying more interest over time.
  • The principal of the consolidated loan includes any outstanding interest on individual loans.
  • The loss of borrower incentives such as interest rate reductions, principal rebates, and loan cancellation benefits on specific loans
  • You will lose credit for any payments made before consolidation toward PSLF or an IDR plan.
  • You cannot pay off individual debts to reduce your monthly payment.

Private Student Loan Consolidation

A private student consolidation loan consolidates and refinances several school debts into a single new loan with a new interest rate, payback period, and monthly payment amount. This could lead to a cheaper interest rate and/or monthly payment. If your payback period is extended, your total cost throughout the life of the loan may increase.

A private consolidation loan simply replaces one or more private education loans with another because most private education loans do not compete on price. The biggest advantage of such a consolidation is the ability to make a single payment each month. Also, because consolidation resets the loan’s duration, the monthly payment may be reduced (at a cost, of course, of increasing the total interest paid over the lifetime of the loan).

But, because private student loan interest rates are determined by your credit score, you may be able to acquire a reduced interest rate through a private consolidation loan if your credit score has dramatically improved since you first obtained the loan.

Interest Rates and Terms

Private student loan consolidation often carries a variable interest rate, in contrast to Federal loan consolidation. As a result, as interest rates rise and fall, your monthly payments will change. Private student loans usually have a repayment period of between 10 and 25 years.

Benefits of Consolidating Student Loans Privately

Lenders may offer you a lower interest rate on your combined private loans based on your creditworthiness. Throughout the loan, this can save you money. Making a single monthly payment also makes keeping track of your payments easier.

Drawbacks of Private Loan Consolidation

Your monthly payment amount may change since private student loans often have variable interest rates.

When to Consider Private Student Loan Consolidation

Consolidating student loans will save you money throughout the life of the loan if you can receive a lower interest rate. While interest rates are frequently determined by a borrower’s credit score, private debt consolidation may be an option if your current credit score is greater than when you took out your student loan.

Federal Student Loan Consolidation

If you have numerous federal student loans, you probably pay different lenders. As a result, there are more payments to keep track of, and it is easy to forget about payment. Consolidating your student loans into a single loan with a single monthly payment is possible with a Direct Consolidation Loan.

Interest Rates and Terms

Your federal student loan consolidation has a fixed interest rate. This, like a fixed-rate mortgage, ensures that your interest rate remains constant, resulting in a stable monthly payment amount. The loan period will be 30 years, which will likely lower your monthly payment.

Should I Consolidate my Federal Student Loans?

Consolidating your student debts will probably result in a reduced monthly loan payment. If you are having trouble keeping track of all of your student loans and, as a result, are missing payments, consolidation will easily take care of that.

If you’re concerned about the impact on your borrower benefits, consider your budget and figure out how you’ll continue to make your current payments. Deferment or forbearance is always available for short-term financial support. There are a few refinancing options to consider as well.

Benefits of Consolidating Federal Student Loans

The weighted average of the interest rates on all of your consolidated loans, rounded up to the closest 1/8 of a percent, will determine the interest rate you pay. As a result, if you have any loans with significantly higher interest rates, consolidating them may be advantageous.

Additional advantages of consolidating federal student loans may include:

  • Reduced monthly payment
  • Simplified loan repayment
  • Repayment period of 30 years
  • Availability of alternative payment plans
  • The ability to convert variable-rate loans to fixed-rate loans.

Drawbacks of Federal Consolidation

The biggest disadvantage of consolidating your federal student loans is the potential loss of borrower benefits, which is the primary concern of most students.

Additional disadvantages include having to pay higher interest. Even while your monthly payment may be lower since you’re spreading out your payments over 30 years, the total amount of interest you pay throughout the life of the loan will be higher.

Borrower advantages that may be lost include:

  • Interest rate discounting
  • Loss of principal rebates
  • Loss of loan cancellation benefits

Can you Consolidate Federal and Private Loans Together?

The answer is no when we’re discussing a Direct Consolidation Loan. There are, however, some options for refinancing or consolidating federal and private student loans. All of your loans will be consolidated by these private lenders. But keep in mind that if you do, you will forfeit your borrower perks on your federal student loans. Options may include student loan forgiveness and income-based repayment choices.

How to Student Loan Consolidation

Go onto and select “Complete Consolidation Loan Application and Promissory Note.” You must complete the application in one sitting, so gather the documents given in the “What do I need?” section before you start and allow about 30 minutes to complete it.

  • Indicate which loans you want to consolidate and which you don’t.
  • Determine a payback strategy. You can choose a repayment plan that is based on your loan balance or one that is income-based. If you choose an income-driven plan, you must then fill out an Income-Driven Repayment Plan Request form.
  • Read the terms and conditions before submitting the form online. Continue to make your regular student loan payments until your servicer indicates consolidation has been completed.

If your loans have fallen behind, consolidation is one of the few options available to bring them back on track. To consolidate defaulted loans, you must agree to take part in an income-driven repayment plan and make three full, consecutive, on-time monthly payments on the defaulted loan.

How Long Does it take to Consolidate Student Loans?

About 30 minutes are required to complete the direct consolidation loan application. It normally takes four to six weeks for your loan consolidation to be finalized after you’ve filed the necessary papers. The first payment on the consolidation loan will be due, and your loan servicer will notify you of this. After that, if possible, set up autopay so you never miss a payment.

If you haven’t received notification that your consolidation is complete, keep making payments on your existing loans. Failure to make a payment might harm your credit and result in late fees.

Rates for Student Loan Consolidation

The weighted average of the interest rates on your federal loans, rounded up to the nearest one-eighth of a percentage point, is your federal student loan consolidation interest rate. As a result, larger loans have a greater impact on your final interest rate.

How federal loan consolidation rates work

  • Payment consolidation makes life simpler. You merge many loans into one when you consolidate federal loans, leaving you with a single monthly payment. A weighted average interest rate of 6.33% can be obtained by merging, for instance, a $10,000 loan at 5% interest with a $20,000 loan at 7% interest. This is rounded up to 6.375%.
  • Their interest rate will remain unchanged. Your interest rate has no upper maximum, but it will remain constant throughout your payback term.
  • Consolidation will not reduce your overall payment amount. Consolidating student loans does not result in lower interest rates. Your payments may be smaller since they are spread out.
  • It may help you qualify for various repayment plans and debt forgiveness. Consolidation may also make you eligible for income-driven repayment plans and forgiveness programs. You are not required to consolidate all of your federal loans; you can choose to consolidate only those that are in need.
  • You are never required to pay for it. There is never a charge for consolidation. Visit to consolidate your federal loans.

Is it wise to consolidate student loans?

Yes. Consolidating your loans has the primary benefit of allowing you to make a single payment to a single loan servicer.

Can my student loans be forgiven if I consolidate?

Yes. Consolidating loans other than Direct Loans may provide you with forgiveness options such as income-driven repayment or Public Service Loan Forgiveness (PSLF). When you consolidate, you’ll be able to convert any variable-rate loans you have to fixed-rate loans.

How do student loans consolidate?

Most federal education loans can be consolidated through, while some private student loans can be consolidated through private lenders. The federal scheme does not, however, allow you to consolidate both federal and private loans.

Does student loan consolidation affect your credit score?

Consolidating student loan debt might occasionally improve one’s credit, but it can also have the reverse effect – at least initially. Your loan servicer will conduct a “hard pull” on your credit report because debt consolidation requires the obtaining of a new loan.

Does consolidation hurt your credit?

Merging numerous debt balances into one single loan — if used to pay off debt — is likely to enhance your credit scores in the long run. But, you may see a drop in your credit ratings at first.

What student loans Cannot be consolidated?

There is no consolidation option for private education loans. Federal student loans earned by the student cannot be combined with Direct PLUS Loans acquired by parents to help pay for a dependent student’s education.


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