Consolidating your Loan

What is a consolidation loan?

A consolidation loan allows you to combine several types of federal student loans with various repayment schedules into one loan with one monthly payment. Your payments might be significantly lower than the 10-year standard repayment plan, and you might receive a lower interest rate than you’re currently paying on one or more of your loans.

Apply for consolidation

To apply for loan consolidation, you must first access your loan information from the Federal National Student Loan Data System. Then, visit Federal Direct Consolidation Loans Information Center to begin the application process.

A consolidation loan can affect your payment amount, payment period and amount of interest:

  • Your monthly payment might be lower because your repayment period is extended.
  • Your repayment period may be extended up to 30 years, depending on the amount of your consolidation loan and your other student loan debt, therefore increasing the amount of interest you repay.
  • Compare the cost of repaying your unconsolidated loans with the cost of repaying a consolidation loan.
  • You should consider whether you’ll lose any borrower benefits if you consolidate, such as interest rate discounts or principal rebates, as these benefits can significantly reduce the cost of repaying your loans.
  • Carefully review your consolidation options before you apply. Talk to your loan servicer for more information before you consolidate.

When to consolidate

You can consolidate during your grace period, once you've entered repayment (the day after the end of the six-month grace period) and during periods of deferment or forbearance.

To qualify for a direct consolidation loan, borrowers must have at least one direct loan or Federal Family Education Loan (FFEL) that is in grace, repayment, deferment or default status. Loans that are in an in-school status cannot be included in a direct consolidation loan.

Consolidation interest rate

The interest rate for consolidation loans is a fixed rate for the life of the loan. The fixed rate is based on the weighted average of the interest rates on all of the loans you consolidate, rounded up to the nearest one-eighth of one percent. The interest rate will never exceed 8.25 percent.