search facebook-square linkedin-square twitter envelope

For borrowers juggling multiple loan payments, federal student loan consolidation can help them lower their monthly payments, by packaging several debts into a single loan.

Student loan consolidation is often dismissed by borrowers because it can be confusing to understand the process of consolidating student loans.

This guide will cover the ins and outs of federal student loan consolidation, including the consolidation application process, and the differences between federal student loan consolidation and student loan refinancing.

What is student loan consolidation?

Loan consolidation lets borrowers combine their student loans so they can make a single monthly payment.

When you consolidate your loans, you can choose to extend the term of your loan, thus lowering your monthly payments. You can also extend the term of your loan, at the same interest rate. This could lower your monthly payments but could mean you end up paying more in interest overall.

How do you consolidate federal student loans?

It’s important for borrowers to understand the difference between federal and private student loan consolidation.

Federal loan consolidation takes place through the Department of Education’s Direct Loan Consolidation Program. Just remember, unlike refinancing, consolidation doesn’t allow you to lower your interest rate. So if you lower your monthly payment by extending your loan term, you could end up paying more in interest overall.

Private student loan consolidation is also called student loan refinancing. Student loan refinancing is when a lender pays off your current loan(s) and gives you a new loan, typically at a lower interest rate. Here are some of the best companies for refinancing.

What does it mean when you refinance your loan?

Refinancing your student loans can help you lower your interest rate. If you’re able to manage your monthly payments, but think you’re paying too much in interest to ever be able to pay off your principal loan amount, you might look to refinancing your student loans.

Federal loan consolidation won’t let you lower your interest rate, but gives you the option to extend your loan term and lower your monthly payments. So if you’ve been struggling to make your monthly payments, and you feel like you’re not going to be able to keep this up for much longer, consolidating your loans might help.

There are a number of differences between refinancing (also called private loan consolidation) and federal consolidation, but for this post, we’ll primarily be focusing on federal student loan consolidation. Learn more about the differences between consolidation and refinancing here.

Can I refinance a student loan after consolidation?

Generally speaking, you can’t consolidate a loan that’s already been consolidated, unless you add on another existing loan.

However, because refinancing takes place with a private lender and not the federal government, you can refinance a consolidated loan, as long as you refinance the entire amount.

Remember, since you’re refinancing a federal loan with a private lender, you will lose any federal borrower benefits that came with your loan, such as access to income-driven repayment, deferment, or forbearance, which are not always available from private lenders.

Is consolidation right for you?

Answer the questions below to see if consolidating or refinancing your student loans is a better option for you.

Benefits of student loan consolidation

Juggling multiple student loans can be complicated, especially if you’re making payments to different loan servicers. Consolidation might help you simplify your monthly payments, by combining many different loans into a single new loan with new terms.

The tables below illustrate an example of how federal loan consolidation can help you manage multiple student loans, by combining them into a single payment. Although it might seem that you are getting a lower interest rate, your new rate is actually the weighted average of your previous interest rates, rounded up to the nearest one-eighth of one percent. So unless you’re changing your loan term, your monthly payment and interest charges will be about the same, or slightly higher, after consolidation.

Before consolidation


Loan A



Loan B



Loan C



Total balance: $83,778

Weighted average APR: 5.38%

After consolidation



A single loan with one monthly payment



Consolidating your loans could mean:

  • Simpler repayment: If you’re having trouble keeping track of multiple payments, consolidating your student loans can make the monthly task of repayment a little easier.
  • Avoiding default: Consolidation could help keep you organized, with fewer payments to worry about, which could help you avoid missing payments.
  • Lower payments: By consolidating your loans, you have the option to extend your loan term and lower your monthly payments. If you’ve been having trouble making your monthly payments, this could be especially beneficial. Just remember that a longer repayment term could mean that you pay more in interest overall.
  • Potentially lower interest rate: If you’ve been good about making your payments and managing your finance, your credit score might have improved since you first took out your loans. If so, you might be eligible for a better interest rate, but only if you consolidate by refinancing with a private lender.
  • Multiple repayment plans: When you consolidate your loans, you have the option to customize some aspects of your loan. For example, you change your loan term. You can also take advantage of a number of different repayment plans, such as the Standard 10-year repayment plan, income-based repayment plans, or a Graduated plan.
  • Consolidate defaulted loans: As an alternative to loan rehabilitation, you may be able to consolidate your defaulted loans into a federal Direct Consolidation Loan if you agree to repay the consolidation loan under an income-driven repayment plan. Contact your loan servicer for more information about loan rehabilitation and consolidation.

Cons of student loan consolidation

While the simpler and potentially lower monthly payments that consolidation offers can be helpful in the short term, there are some longer term costs to keep in mind.

  • Longer repayment term = higher repayment costs: Consolidation gives you the option to lower your monthly payments by extending your loan repayment term. While this may be beneficial if you’re struggling to make your monthly payments, stretching payments out over a longer period of time without an interest rate reduction could mean that you end up paying thousands of dollars in additional interest.
  • Loss of certain repayment plans: Some loans, like PLUS loans taken out by parents, aren’t eligible for the most attractive income-driven repayment programs, like PAYE, REPAYE and IBR. Parent PLUS loans only qualify for income-contingent repayment (ICR), and only if they have been consolidated. So if you consolidate PLUS loans with any other federal loans you have, you will no longer be eligible for repayment plans like PAYE, REPAYE, and IBR.
  • One shot only: Typically, you can only consolidate your loans with the federal government once (see more below). There is no limit on how many times you can refinance loans with a private lender to take advantage of lower rates.
  • A single repayment plan: Once you consolidate your loans, your new weighted interest rate applies to your entire balance. It’s no longer possible to target loans with the highest interest rates for faster repayment. Although you can accelerate payments (make more than the required minimum monthly payment) on the entire balance of your consolidation loan, you cannot repay portions of a consolidation loan under different repayment plans.

Should I consolidate my student loans?

If you have federal student loans and a) have too many different payments to keep track off or b) would like to qualify for different repayment plans like income-driven repayment or Public Service Loan Forgiveness, consolidation might be a good idea!

Consolidating your federal loans will give you the opportunity to consolidate multiple loans into one (lower) monthly payment, and also let you choose a new repayment term and repayment plan.

When should I consolidate student loans?

  • You want to lower your monthly payment
  • You’d to stop juggling multiple, separate student loans
  • You’ll be earning more soon
  • You’re not close to paying off your loan

If you answered “yes” to all of these, you might want to look into consolidating your loans. If you’re more concerned about lowering your interest rate, private student loan consolidation, or refinancing, might be the better option for you.

Created with Compare Ninja

*Refinancing your loans can lower your interest rate and your monthly payment. Federal loan consolidation can lower your monthly payment if you extend your loan term, but stretching out payments over a longer time period without an interest rate reduction can increase overall repayment costs.

Can I consolidate a consolidated loan?

According to the Department of Education, you cannot consolidate a loan with the federal government that’s already been consolidated, unless you add on an additional, existing eligible loan or loans. You can refinance loans with private lenders as often as you would like.

Can I consolidate parent PLUS loans with other types of direct federal student loans?

If you consolidate parent PLUS loans with other direct federal student loans into a Federal Direct Consolidation Loan, the only income-driven repayment (IDR) program that loan will be eligible for is income-contingent repayment (ICR), the least generous of all IDR plans. You will not be eligible to enroll in PAYE, REPAYE or IBR to repay a federal direct consolidation loan that includes a parent PLUS loan.

Consolidating loans with a private lender (refinancing) disqualify those loans from all federal IDR plans.

What loans can you consolidate?

Most federal student loans are eligible to be combined into a federal Direct Consolidation Loan, including:

  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • Subsidized Federal Stafford Loans
  • Unsubsidized Federal Stafford Loans
  • Direct PLUS Loans
  • PLUS Loans from the Federal Family Education Loan (FFEL) Program
  • Supplemental Loans for Students
  • Federal Perkins Loans
  • Federal Nursing Loans
  • Health Education Assistance Loans

However, there are some key points to keep in mind before you decide to consolidate:

  • You can’t consolidate your private loans with your federal loans into a federal Direct Consolidation Loan.
  • You need to have at least one student loan that is in repayment or in your grace period.
  • If your loans are in default, you must meet certain requirements before consolidating.
  • Parent PLUS loans taken out by parents cannot be consolidated with your other federal loans.
  • You must begin repayment 60 days after your Direct Consolidation Loan is disbursed or sooner, depending on your servicer.
  • You must keep making your loan payments to your original loan servicer until your consolidation is confirmed and your initial loans have been paid off.
  • Private loans are not eligible for federal loan consolidation. If you want to consolidate your private loans with your federal loans, refinancing might be a better option for you.

Can you consolidate private and federal student loans together?

You can’t consolidate your private loans with your federal loans into a federal Direct Consolidation Loan.

However, if you have both private and federal loans, and wish to convert your federal student your loans into private student loans, you could consider refinancing your loans with a private lender.

Keep in mind that when refinancing with a private lender, you lose federal borrower benefits such as access to income-driven repayment programs, forbearance, or deferment, and the potential to qualify for loan forgiveness after 10, 20 or 25 years of payments. Some private lenders may offer similar benefits.

Can you consolidate student loans from different lenders?

Yes, you can. Any eligible federal loans can be combined in a direct federal consolidation loan, regardless of who the loan servicer is. If you have private loans they are not eligible for federal loan consolidation.

If you have a mix of both private and federal student loans, you can refinance them together with a private lender, even if you have private loans from multiple lenders.

Can you consolidate credit card debt?

If you’ve gotten into the habit of running up large balances on multiple credit cards, it can be hard to pull back. But consolidating your credit card debt could help.

  • Transfer your balances: Some credit card companies will allow you to transfer all your existing credit card balances to a new card, at a 0 percent interest rate for a limited period of time. If you think you can pay off your existing balance within that limited time period, transferring your balances could be beneficial. Just remember to factor in the fee that’s usually associated with each of these transfers.
  • Take out a personal loan: If you think you cannot pay off your debts before the promotional period on the credit card ends, you might consider taking out a personal loan. You’ll still have to pay interest on the personal loan, but you could get a rate that’s lower than the interest rate on your credit cards.
  • Leverage home equity: If you own your home, you can use it as collateral to take out a line of credit on it. You can then use that money to pay off your debt. Just remember that you’re putting your home on the line, so make sure you can make your payments consistently, and on time.

Can you consolidate student loans with bad credit?

Debt consolidation with bad credit is possible, but it will likely take a bit of work.

The good news is that bad credit doesn’t mean you don’t have options, although a low credit score might limit your options.

  • Know your credit score: Knowing your credit score before you consolidate your loans will save you time, and help you figure out what options you may qualify for.
  • Watch out for certain debt consolidation companies: There are a number of companies that provide debt consolidation. While these companies may offer low monthly payments, it’s important to read the fine print and understand exactly what interest rates and fees you will be charged.
  • Explore peer-to-peer lending: Peer-to-peer lenders, like Prosper, connect private lenders with borrowers looking for loans. While a bank may turn you down due to poor credit, some peer-to-peer lenders might not be as strict.

Student loan debt can be considered “good debt” because it is seen as an investment in your future. If you’re able to make consistent, timely payments towards your student loans, you may see your credit score improving over time.

The process of student loan consolidation

How do you consolidate student loans?

If you’ve read about the pros and cons of student loan consolidation, and understand the differences between private and federal loan consolidation, you might have decided that federal loan consolidation is right for you.

Applying for student loan consolidation shouldn’t take you very long, as long as you’ve done your research and have all your required information at hand.

How to apply for federal direct loan consolidation

Once you start the application process, you’ll need to complete it in one sitting. Remember, you’ll need to provide details about all your existing loans that you want to consolidate, and choose a new loan servicer and repayment plan when you apply to consolidate.

Follow these three easy steps to consolidate your federal student loans:

Step 1: Once you’re ready, head on over to Log in, and fill out the consolidation application. You can find the application under the ‘Repayment and Consolidation tab’, or go here.

student loan consolidation

Select all the loans that you want to consolidate (you can consolidate all your existing loans, or just choose some to consolidate). And if you have any Parent PLUS loans, consolidating those with your other federal loans will mean you might lose access to certain repayment plans.

*Consolidating with the federal government is always free. If you are asked to pay for anything, you’re probably not using a trustworthy site!

Step 2: Once you’ve entered in the information about all the loans you wish to consolidate, you’ll need to choose a student loan servicer.

It is your student loan servicer’s duty to help keep you in good standing, by ensuring you make timely payments, helping you change repayment plans, and providing the support you need.

Step 3: Choose a new repayment plan. There are eight different repayment plans you can choose from for your new consolidated loan. Use this repayment estimator to figure out which plans you qualify for, and which ones may be best for you.

That’s it, you’re done! Remember to review all your information to make sure it’s entered correctly and then hit submit.

Student loan consolidation eligibility

If you have eligible federal student loans and wish to consolidate them, keep in mind the following eligibility requirements:

  • Of all the loans you wish to consolidate, at least one must be a Direct Loan or an FFELP loan.
  • You must either be in the grace period for the loans you consolidate or be in repayment.
  • If your loans have already been consolidated, you cannot consolidate them again, unless you are adding on new loans.

Remember to keep making your loan payments in a timely and consistent manner until your consolidation application is approved! Simply submitting an application for consolidation does not mean you can stop making payments.

How to find the best student loan consolidation lender

While federal direct consolidation is pretty straightforward, if you’re interested in private student loan consolidation, or refinancing, it’ll take a little more work.

The only way to consolidate federal student loans is through the federal government, by using, or by refinancing them through a private lender. But when it comes to private loans, there are a number of different lenders out there, all offering different interest rates and terms.

But don’t let the number of options overwhelm you — if you have private loans, it can be really helpful to compare the various offers that are available.

With Credible, you can compare offers from a variety of vetted lenders, without incurring a hard credit pull, so you can find the best loan consolidation company for you.

Check Your Rates Now

What are student loan consolidation interest rates?

When you consolidate your loans, your new interest rate will be calculated as the weighted average of all the loans you choose to consolidate. There is no cap on the interest rate of a federal direct consolidation loan.

What are the different repayment plans?

There are eight different repayment plans for federal student loan consolidation. These include income-based repayment plans such as PAYE and REPAYE, as well as the Standard 10-year repayment plan, and the Graduated Repayment Plan.

Keep reading for more information about the various repayment plans available.

The federal government’s repayment estimator can help you decide which repayment plans you qualify for, and which options are best for you.

When do I begin repayment?

You can begin repaying a consolidated loan 60 days after it is disbursed, or sooner. Once your application for consolidation is approved, your loan servicer will contact you to let you know when your first payment is due.

Depending on the amount and terms of your loan, and the type of repayment plan you have chosen, your loan repayment term can last anywhere from 10 to 30 years.

If you consolidate a loan or loans that are still in the grace period, you may be able to postpone the start of your repayment until the grace period ends. If any of the loans you wish to consolidate are in the grace period, remember to make a note of this in your application.

Choosing the right loan options

How to choose the right loan servicer

Not all student loan servicers are built the same. Consolidating your loans gives you the opportunity to choose a servicer that’s right for you.

When consolidating your federal direct loans, the government gives you the option to choose between FedLoan Servicing, Great Lakes Educational Loan Services, Nelnet, or Navient.

FedLoan Servicing: this is the Direct Loan servicing branch of the Pennsylvania Higher Education Assistance Agency (PHEAA).

If you can, and wish, to take advantage of the Public Service Loan Forgiveness program, keep in mind that your loan will automatically be transferred to FedLoan Servicing.

Great Lakes Higher Education: Great Lakes is a nonprofit that serves as a guaranty agency for the FFEL federal loan program.

Nelnet: Nelnet is a for-profit company that services student loans throughout the U.S. and Canada.

Navient: You’ve very likely heard of Navient – a for-profit company and the largest private student loan servicer in the country. Navient acquires, finances and services private education loans and federal loans in the FFEL program.

It’s best to research each of these servicers and read their reviews before making your decision.

Which repayment plan is right for you?

There are eight different repayment plans you can choose from when you consolidate federal direct loans. It’s best to read up on the differences between the various plans before you make your choice.

There are two basic buckets into which repayment plans fall — those that are income-based and those that are not.

    • Income-driven repayment plans determine your minimum monthly payment as a percentage of your annual income. Typically, these plans may also have a longer repayment term, ranging from 10 to 20 or 25 years. Income based plans do offer loan forgiveness for any remaining loan balance at the end of your repayment term. However, remember that any forgiven amount is considered income, and you must pay taxes on it (loan forgiveness granted after 10 years of payments under the Public Service Loan Forgiveness program is not considered taxable income.). Further, if your repayment plan is longer with an income-based plan, you’ll end up paying more in interest overall, even if your monthly payments decrease.

Income-driven repayment plans


Repayment period (years)
Minimum monthly payment
Eligible loans
Revised Pay As You Earn (REPAYE)

Up to 20 or 25 years


– Subsidized and Unsubsidized Loans

– Direct PLUS Loans made to students

– Consolidation Loans that do not include PLUS Loans (Direct or FFEL) made to parents

Paye As You Earn (PAYE)

Up to 20 years


– Direct Subsidized and Unsubsidized Loans

– PLUS Loans made to students

– Direct Consolidation Loans that do not include PLUS Loans (Direct or FFEL) made to parents

Income-based repayment (IBR)

Up to 20 to 25 years

10% or 15%

– Direct Subsidized and Unsubsidized Loans

– Subsidized and Unsubsidized Federal Stafford Loans

– All PLUS Loans made to students

– Consolidation Loans  (Direct or FFEL) that do not include  Direct or FFEL PLUS Loans made to parents

Income-contingent repayment (ICR)

Up to 25 years


– Direct Subsidized and Unsubsidized Loans

– PLUS Loans made to students

– Consolidation Loans

To learn more about income-driven repayment plans, check out our guide here.

    • Non-income-based plans do not depend on your income. These include the Standard 10-year repayment plan, the graduated plan, and the extended repayment plan. If you don’t want to deal with the hassle of re-applying for an income-based plan every year, you might look into one of the regular repayment plans.

Standard repayment plans


Term length (years)
Eligible loans
Standard repayment plan

Up to 10 years

– Direct Subsidized and Unsubsidized Loans

– Subsidized and Unsubsidized Federal Stafford Loans

– All PLUS Loans

– All Consolidation Loans (Direct or FFEL)

Graduated repayment plan

Up to 10 years

– Subsidized and Unsubsidized Loans

– Subsidized and Unsubsidized Federal Stafford Loans

– All PLUS Loans

– All Consolidation Loans (Direct or FFEL)

Extended repayment plan

Up to 25 years

– Direct Unsubsidized and Subsidized Loans

– Subsidized and Unsubsidized Federal Stafford Loans

– All PLUS Loans

– All Consolidation Loans (Direct or FFEL)

This table was created with Compare Ninja.

What type of student loans do you have? Do you think student loan consolidation right for you? Tell us in the comments below.

We encourage you to provide honest and thorough feedback about your experience (not the experiences you’ve heard from other people), the good as well as the bad. But, we also want you to follow these content guidelines. The comments or responses that Credible posts under its official account are not provided, reviewed or endorsed by any of the financial institutions unless specifically stated otherwise in the response. Please keep in mind that the financial institution has no obligation to monitor any comments, questions or reviews you post and is therefore not responsible for ensuring your posts and/or questions are answered.