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Student Loan Consolidation

What is Consolidation?

Consolidation is an option to simplify the repayment process of multiple federal student loans into one consolidation loan with a single monthly payment. With a consolidation loan, your loan holder pays off your existing loans with the new consolidation loan.

A consolidation loan may also be available for private/alternative loans from the loan holder. Private/Alternative loans cannot be included in a federal consolidation loan. For more information, contact your private/alternative loan holder.

What Federal Student Loans Can I Consolidate?

Federal consolidation loans are only available through the Federal Direct Loan program.

• Federal Direct Subsidized & Unsubsidized Loans
• Federal Direct Parent PLUS Loans (Students cannot Consolidate a parent PLUS Loan with their own student loans.)
• Federal Direct Graduate PLUS Loans
• Federal Perkins Loans
• Federal Nursing Loans (NSL)
• Federal Supplemental Loans for Students (SLS)
• Health Education Assistance Loans (HEAL)
• Health Professions Student Loans (HPSL), including Loans for Disadvantaged Students (LDS)

You are not required to consolidate all of your federal student loans (Direct, PLUS, Perkins, Health Profession Loans, Loan for Disadvantaged Students and older SFA loans).


• One payment - all your loans are combined into one loan
• Lower monthly payments - by extending the time you have to repay the consolidation loan.
• Fixed interest rate for a Federal Consolidation Loan (does not apply to alternative/ private consolidation loans).


• Losing borrower benefits - consolidation loans do not offer the same benefits that you would receive on your original loans. For example, you might lose some discharge (cancellation) benefits if you consolidate a Federal Perkins Loan. Other borrower benefits that may be lost include interest rate discounts or principal rebates that can significantly reduce the cost of repaying your loans.

• Greater total amount repaid - by extending the time you have to repay the loan, you will pay more interest on the loan. In fact, consolidation can double total interest expense.

• Earlier repayment start date if you consolidate during a “grace period” for a Federal Perkins Loan or Federal Direct Loan.

If you are experiencing difficulty making your current federal student loan payments, you have repayment plan alternatives besides consolidation. Contact your federal student loan servicer to consider options to switch to an extended, graduated or income-based repayment plan.

It is important that you ask the right questions and know all of the terms, benefits and options before consolidating. Once you consolidate, the consolidation loan has paid off the original loans and it cannot be cancelled.

What is the Interest Rate on a Federal Consolidation Loan?

Direct Consolidation Loans have the same fixed interest rate set by a formula established by law. The fixed interest rate is a weighted average of the current rates on the loans that are being consolidated, rounded up by one-eighth of one percent. The maximum interest rate for a federal consolidation loan is 8.25%.

What is the Repayment Period for a Federal Consolidation Loan?

The repayment period ranges from 10 to 30 years, depending on the amount of your debt and the repayment option you select.

When Can I Consolidate?

You can consolidate your federal loans in a grace, repayment, deferment, or forbearance status.
Note: You can no longer consolidate your loan(s) while you are enrolled in school.

How Do I Consolidate?

After researching all of your options and choosing the lender with whom you wish to consolidate, you should contact the lender directly to begin the consolidation process.

•  Direct Consolidation Loans - contact the Direct Loan Origination Center’s Consolidation

•  Private Consolidation Loans - contact the lender or servicer of your current loans.

If you are uncertain regarding your federal student loan holder, you can review your federal student loan history at the National Student Loan Data System (NSLDS).

Private Loan Consolidation

While you cannot consolidate your private/alternative loans with your federal loans, some lenders provide a private loan consolidation.

With many of these lenders, you must meet certain qualifications to consolidate your private loans. These qualifications are based on credit score and the amount borrowed. There may be other criteria as well, so you need to check with the private consolidation lender of your choice to ensure that you meet their specific qualifications.

As with the federal consolidation loans, it is important that you research and compare lenders prior to making your final lender decision to ensure you are getting the best terms and benefits available. Once you consolidate your private loans, you cannot consolidate them again for a better consolidation package.

Additional Resources:

The Guide to Federal Student Aid
Student Aid on the Web - Loan Consolidation

NSLDS - view all your Federal Direct, Perkins and PLUS loan information
National Student Loan Clearinghouse - My Student Center
Mapping Your Future - Loan Consolidation