Student loan consolidation is a way to combine multiple federal loans into a single direct consolidation loan. By applying through the U.Southward. Department of Educational activity'southward Federal Educatee Assist office, borrowers tin streamline the pecker-paying process, lower monthly payments and notice a repayment plan that fits their needs. Borrowers who have defaulted on 1 or more federal pupil loans can use consolidation every bit an alternative to loan rehabilitation.

Reasons to Consolidate Schoolhouse Loans

In general, student loan consolidation is only bachelor for federal loans. Refinancing, on the other hand, is available to borrowers of both federal and individual loans. For borrowers with federal pupil loans, consolidation can assistance lower and simplify monthly payments. It's too a slap-up manner to access boosted repayment plans and borrower protections, rehabilitate a defaulted loan or otherwise ease the stresses of debt repayment.

Student loan consolidation may be a good option if you want:

  • Lower monthly payments. Educatee loan consolidation extends the repayment menstruum to up to 30 years, thereby lowering your monthly payment. Keep in mind, nevertheless, that you'll pay more than interest on your loan in the long run.
  • Simplified payments. If you're currently making educatee loan payments to multiple servicers, consolidation tin streamline this process so you just accept to pay off ane loan.
  • More repayment options and borrower protections. Consolidating federal loans enables borrowers to cull from a number of income-driven repayment (IDR) plans. What'due south more, borrowers who would not otherwise be eligible for Public Service Loan Forgiveness (PSLF) can qualify past consolidating their federal loans nether a directly consolidation loan.
  • A different loan servicer. If you're having trouble with your current federal student loan servicer, consolidation gives you the flexibility to cull a new 1. When completing your consolidation application, you'll exist asked to select a servicer for the new loan.
  • An alternative to loan rehabilitation. If you lot already have pupil loans in default, loan consolidation tin aid you lot pay off that loan if you concord to repay the new loan nether an IDR plan or make iii voluntary, on-fourth dimension and full monthly payments on a defaulted loan before consolidating it.

Consolidation vs. Refinancing

Student loan consolidation enables borrowers to combine multiple federal educatee loans into a single federal educatee loan. Although consolidation simplifies multiple loans into one streamlined payment, it will likely increase the amount of involvement yous pay over time—meaning you lot can't salve coin through consolidation. Instead, the procedure extends your repayment menstruum, thus lowering your monthly payment but increasing the total interest you'll pay.

Student loan refinancing, on the other hand, is the process of combining multiple private and/or federal pupil loans into a single individual loan. Dissimilar consolidation, refinancing enables borrowers to lower their involvement rates, which can salve coin over the life of the loan. Withal, refinancing student loans with a private loan means you won't have admission to federal loan protections, repayment options or forgiveness programs.

Pros of Consolidating Your Student Loans

  • Extended repayment term
  • Streamlined payment process
  • Lower monthly payments
  • Power to switch from a variable- to a fixed-rate loan
  • Alternate repayment options, including graduated and IDR plans

Cons of Consolidating Your Student Loans

  • Extended debt period means paying more interest over time
  • Outstanding involvement on individual loans becomes part of the consolidated loan chief
  • Loss of borrower benefits similar involvement rate discounts, main rebates and loan cancellation benefits on certain loans
  • You'll lose credit for any pre-consolidation payments toward PSLF or an IDR plan*
  • Y'all can't pay off individual loans to lower your monthly payment

*The Section of Education announced temporary changes that allow PSLF-eligible borrowers to consolidate certain loans without losing credit for earlier payments. If you consolidate qualifying loans by Oct. 31, 2022, previous payments may still be eligible for PSLF. Discover full details of the action steps you must take on the Federal Student Aid site.

How to Get Canonical for Consolidating Your Student Loans

Students who accept graduated, left school or dropped below half-time enrollment are eligible to consolidate their federal student loans. There are no credit requirements for federal student loan consolidation. However, in that location are several other requirements that limit who tin employ for a directly consolidation loan:

  • The loans you want to consolidate must already exist in repayment or in the grace menses, which lasts six months later y'all graduate, exit school or driblet below half-time enrollment—depending on the type of loan.
  • In full general, if you already consolidated a loan, you can't consolidate it once again without besides consolidating another eligible loan.
  • The loans you want to consolidate cannot exist in default unless you make three consecutive monthly payments on the loan prior to consolidation or agree to repay your new direct consolidation loan under one of several income-related repayment plans.
  • Likewise, consolidating a defaulted loan that'due south being collected through wage garnishment—or in accordance with a court society—isn't permitted unless the garnishment club is lifted or the judgment vacated.

In contrast, private student loan refinancing has approval requirements like to traditional loans. To qualify, lenders typically require a credit score in the upper 600s, a debt-to-income ratio under 50% and a demonstrated ability to repay the loan.

5 Steps to Accept to Consolidate Pupil Loans

Federal loan consolidation is managed through the function of Federal Financial Aid (FSA). This makes information technology like shooting fish in a barrel to log in, view your loan details and complete a consolidation awarding and promissory note, whereby you hope to repay the loan. The awarding process takes nether thirty minutes, and blessing tin take between 30 and xc days, so you should go on making payments on your existing loans until the consolidation loan is disbursed. Follow these steps to consolidate your federal student loans:

1. Sign in to Your Federal Student Aid Account

An FSA account is necessary to apply for federal educatee aid, so you likely already have login credentials. Start the consolidation process past signing in at StudentAid.gov and navigating to "Manage Loans" and and so "Consolidate My Loans" in the toolbar.

2. Get together the Necessary Documents

Before offset the consolidation process, compile the documents necessary to complete the application and promissory notation, including your education loan records and personal income information. If you're completing the application online, you'll have admission to all of your federal loan details. Y'all also should locate contact information for 2 references who accept known you for at to the lowest degree 3 years, including one parent or legal guardian.

3. Complete a Consolidation Loan Awarding

After gathering the necessary documentation, complete a Directly Consolidation Loan Awarding and Promissory Note. This free awarding can be submitted online or in hard copy and includes the following sections:

  • Choose Loan & Servicer. The beginning section of the loan application requires y'all to select which loans to consolidate and then calculates the new consolidated loan amount and interest charge per unit. This is also where you'll asking a grace period and choose a loan servicer.
  • Choose Repayment. Federal student loan repayment options depend on the types of loans you're consolidating and your fiscal status. This section of the awarding calculates your estimated monthly payments under several plans using your income, family size and tax condition. Finally, you'll be asked to choose a repayment programme before moving on to the next department of the application.

  • Terms & Conditions. This portion of the application includes the Borrower Understandings, Certifications and Authorizations, which—among other things—describes and authorizes the U.South. Department of Education's processing and awarding of a direct consolidation loan against a borrower'due south account. It's also where you'll promise to make payments on the consolidated loan and affirm your understanding of—and agreement to—the terms and weather of the consolidated loan.
  • Personal Information. In this section, consummate all of the borrower data, including your driver'south license number, address, contact information and employer details. Then, enter the names and contact information of two references.
  • Review & Sign. Finally, review your completed application, acknowledge that all of the data is true and correct—and that you understand repayment requirements—and sign.


Check out this application demo for step-past-footstep guidance throughout the application procedure.

4. Look Blessing & Continue Making Payments

After you submit your application, contact the consolidation servicer you selected with any questions about your application condition. Online applicants receive their servicer's contact information at the end of the awarding process; paper applicants receive it when they download or print their awarding. In general, the loan approval process takes betwixt 30 and 90 days, merely this varies by servicer.

Once your application is approved, the lender will pay off the remainder of your existing loans with your direct consolidation loan. Still, there volition be a filibuster between your application, loan approval and when your original federal loans are paid off. For that reason, it'due south important to continue making payments on your existing federal loans until your servicer notifies you the new loan was disbursed and your loans consolidated.

5. Begin Repayment

Your repayment corporeality and schedule are based on the repayment plan selected during the awarding process. The loan servicer will contact yous with your payment schedule—and the date of your first payment—but borrowers mostly have up to 60 days later on loan disbursement to begin repayment. If some of your existing loans were in the grace period and you requested to filibuster consolidation, you won't have to brand payments until closer to that appointment.

Alternatives to Student Loan Consolidation

Loan consolidation doesn't piece of work for everyone, so information technology's helpful to understand the other options available for federal student loan borrowers. Deferment, forbearance and IDR plans may be a skilful option if yous're struggling to make your electric current monthly payments. Notwithstanding, if y'all want a lower interest rate—or desire to consolidate private student loans—consider refinancing.

  • Deferment. Student loan deferment lets borrowers pause their payments for a prepare period of fourth dimension. What's more than, if you have a subsidized federal student loan or Perkins loan, interest will not accumulate during the deferment menstruation. This option is available to borrowers who are dorsum in schoolhouse, unemployed or otherwise struggling to make minimum payments.
  • Abstinence. If y'all're not eligible for deferment, you can apply for forbearance, which must exist canonical by your loan servicer. Under this culling, yous'll be responsible for interest on all of your federal loans. The interruption in payments is limited to 12 months at a fourth dimension.
  • Income-driven repayment programme. Income-driven repayment (IDR) options let borrowers reduce their monthly payments to be more in line with their income. Under these plans, monthly payments are usually betwixt 10% and xx% of a borrower's monthly discretionary income.
  • Private refinancing. If you lot have federal or private pupil loans and desire to lower your interest rates or combine into one piece of cake payment, consider refinancing. The process for applying to refinance your student loans involves identifying a lender and completing a loan application procedure.