How to Consolidate Your Student Loans

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Student loan consolidation lets you combine your existing loans into a single loan with a new interest rate and repayment term. There are two popular ways to consolidate student loans:

• Federal direct consolidation: Most government loans can be converted into a federal Direct Consolidation Loan. You won’t get a lower interest rate, but you do have the option to lower your monthly payments by stretching them out over a longer period of time.
• Private student loan consolidation: Also called student loan refinancing, this is available for both private and federal loans. Not only can you adjust your repayment term, but you may qualify for a lower interest rate.

In this post:

• Who should consolidate student loans
• Loan types that can be consolidated
• How consolidation compares to refinancing
• How to consolidate federal student loans
• How to consolidate private student loans

Who should consolidate student loans

Both federal and private student loan consolidation can simplify your life by allowing you to make a single monthly payment on the loans you combine.

Consider federal loan consolidation first if:

• You’re having trouble making the monthly payments on your federal loans
• You want to enroll in an income-driven repayment plan
• You hope to qualify for loan forgiveness

Private loan consolidation may be a better option if:

• You won’t qualify for loan forgiveness
• You’re paying high interest rates on your student loans
• You can afford your monthly payments

Learn More: The Complete List of Student Loan Forgiveness Programs

For a federal Direct Consolidation Loan you’ll need:

• To be in grace or repayment: You can’t consolidate while you’re in school, or consolidate a loan that is currently in default.
• Your FSA ID: This is your Federal Student Aid ID. It gives you access to the online portal for your loans and also serves as your digital signature.
• Financial documents: Depending on your plan, you might be required to complete income information, so have recent tax returns handy. If you’re married, you’ll need your partner’s tax returns and income information as well.

For private student loan consolidation you’ll need:

• A history of earnings and credit: If your credit score keeps you from being approved, you can try applying with a cosigner.
• Enough income to manage your monthly payments: If your debt-to-income ratio is too high, you might not be approved.

Loan types that can be consolidated

Private student lenders will consolidate almost any federal or private student loan taken out by a creditworthy borrower to attend a qualified school. Most lenders will refinance parent PLUS loans, and a few will also let parents transfer those loans to their children.

Only government student loans are eligible to be combined in a federal Direct Consolidation Loan. But almost any type of federal loan, including the following, qualifies:

How consolidation compares to refinancing

Federal student loan consolidation can lower monthly payments by stretching out your loan term to as long as 30 years. But your interest rate does not change — it’s the weighted average of your existing loans, rounded up to the nearest one-eighth of a percent.

Since you don’t get an interest rate reduction, the tradeoff for lowering your monthly payment through federal consolidation can be thousands of dollars in additional interest charges. But if you end up qualifying for loan forgiveness in an income-driven repayment plan, you may come out ahead.

You may qualify for a lower interest rate with lenders that offer private student loan consolidation. Refinancing with a private lender also allows you to adjust your repayment term, and a lower interest rate can help you pay your loans off faster. Borrowers who lower their interest rate and shorten their repayment term can save tens of thousands in interest charges.

Learn More: Student Loan Consolidation vs. Student Loan Refinancing

How to consolidate federal student loans

To consolidate federal loans, apply through the Department of Education’s website, studentloans.gov, for a Direct Consolidation Loan. The process is easy, and free — there’s no need to pay third-party companies that may offer to help you apply for federal loan consolidation.

When to consider federal consolidation

You can consolidate your federal student loans any time after you graduate. If you’d like to keep the six-month cushion provided by your grace period, you can specify that you want the loan application to be processed closer to when the grace period ends.

Some types of federal loans must be combined into a federal Direct Consolidation Loan in order to be eligible for income-driven repayment options which can lead to loan forgiveness. Parent PLUS loans, for example, are only eligible for IDR plans after being consolidated. Older Stafford loans from the FFEL program must also be consolidated in order to qualify for an IDR plan.

But be careful. If you already have loans enrolled in an income-driven repayment plan, or have made qualifying payments toward Public Service Loan Forgiveness, you’ll have to start over if you convert those loans into a federal Direct Consolidation Loan. Payments made before you consolidated won’t count toward forgiveness.

Learn More: Pros and Cons of Consolidating Student Loans

For private student loan consolidation, lenders typically want to see a history of earnings, and a good credit score. Although you may qualify to refinance soon after leaving school and landing a job, you may qualify for a better rate once you’ve been working for a year or two.

Qualifying for federal student loan consolidation

For a Direct Consolidation Loan, you’ll need to either be already repaying your current student loans or the loans will need to be in their grace period. You can’t consolidate a loan amount that is currently in default.

How long it takes

You can fill out the application for a federal Direct Consolidation Loan online at StudentLoans.gov. You have to complete the application in a single session — you can’t save your progress — but it takes most people less than 30 minutes.

Repayment begins within 60 days after your new loan is paid out. Your loan servicer will let you know when the first payment is due.

How to consolidate private student loans

If you’re interested in lowering the interest rates on your federal and private student loans, look into private student loan consolidation. Checking rates with several lenders that offer student loan refinancing will help you find the loan that’s the best fit for you.

Qualifying for private loan consolidation

You’ll need a good to excellent credit to qualify for private consolidation — if your credit score is less than 650 to 670, you’ll have better odds applying with a spouse or relative as a cosigner.

To be a good candidate for refinancing, it helps if you:

• Earned your degree: Not all lenders require a degree, but many do
• Have a solid history of credit and earnings: Once you graduate, landing a job boosts your creditworthiness
• Make enough money: The most common reason borrowers are turned down for refinancing is not their credit score, but excessive debt-to-income ratio

Private student loan consolidation makes sense if you don’t expect to qualify for federal student loan forgiveness, and you don’t care about losing access to government programs like income-driven repayment.

Types of loans that are eligible for private loan consolidation

• Federal student loans: Direct subsidized and unsubsidized loans, Federal Family Education Loan (FFEL) loans, FFEL consolidation loans and direct consolidation loans can all be refinanced.
• Private student loans: You can refinance most private loans that were taken out to attend colleges and universities that are certified to accept federal aid. Private loans that were previously refinanced also qualify.
• Parent and grad PLUS Loans: If you took out parent PLUS loans for your child, most lenders will refinance them if you keep them in your own name. Some lenders will also allow parents to transfer PLUS loans to their children if the child qualifies for refinancing.

When you should consider private consolidation

Refinancing can help borrowers meet different goals. The type of loan you pick, and the savings you can achieve by refinancing, will depend on your goal:

• Lower your monthly payment: Many borrowers who want to lower their monthly payment will refinance into a loan with a longer repayment term. Even if you lower your interest rate, your total repayment costs may increase if you stretch your payments out over many years.
• Maximize savings: Refinancing into a loan with a shorter repayment term will get you the lowest interest rate, and produce the greatest total savings over the life of the loan. The tradeoff is that your monthly payment may increase.
• A little of both: If you refinance into a loan with a lower interest rate but roughly the same repayment term, you can lower your monthly payment and total repayment costs, although not as dramatically as if you focused on one goal or the other.

Learn More: 10 Best Student Loan Refinance Companies

Interest rates for consolidating private student loans

Lender	Fixed rates from (APR)	Variable rates from (APR)	Loan terms (years)
View details	4.54%+	N/A	10, 15, 20
Fixed rates from (APR): 4.54%+ Variable rates from (APR): N/A Repayment terms (years): 10, 15, 20 Repayment options: Immediate repayment, forbearance, loans discharged upon death or disability Fees: None Discounts: Autopay Eligibility: Must be a resident of Kentucky Customer service: Phone Soft credit check: No Cosigner release: After 24 - 36 months Min. credit score: Does not disclose Max. undergraduate loan balance: $250,000 - $500,000 Max. graduate loan balance: $250,000 - $500,000 Offers Parent PLUS refinancing: Yes
View details	2.70%+	1.93%+	5, 7, 10, 15, 20
Fixed rates from (APR): 2.70%+ Variable rates from (APR): 1.93%+ Repayment terms (years): 5, 7, 10, 15, 20 Repayment options: Military deferment, forbearance Fees: Late fee Discounts: Autopay Eligibility: Must have a credit score of at least 720, a minimum income of $60,000, and must be a resident of Texas Customer service: Email, phone Soft credit check: Does not disclose Cosigner release: No Min. credit score: 690 Max. undergraduate loan balance: $100,000 - $149,000 Max. graduate loan balance: $200,000 - $249,000 Offers Parent PLUS refinancing: Does not disclose
View details	2.97%+¹	1.99%+¹	5, 7, 10, 15, 20
Fixed rates from (APR): 2.97%+¹ Variable rates from (APR): 1.99%+¹ Repayment terms (years): 5, 7, 10, 15, 20 Repayment options: Immediate repayment, academic deferment, military deferment, forbearance, loans discharged upon death or disability Fees: Late fee Discounts: Autopay, loyalty Eligibility: Must be a U.S. citizen or permanent resident and have at least $10,000 in student loans Customer service: Email, phone, chat Soft credit check: Yes Cosigner release: After 24 - 36 months Min. credit score: Does not disclose Max. undergraduate loan balance: $100,000 - $149,000 Max. graduate loan balance: Less than $150,000 Offers Parent PLUS refinancing: Yes
View details	3.34%+2	3.24%+2	5, 7, 10, 12, 15, 20
Fixed rates from (APR): 3.34%+2 Variable rates from (APR): 3.24%+2 Repayment terms (years): 5, 7, 10, 12, 15, 20 Repayment options: Military deferment, forbearance, loans discharged upon death or disability Fees: Late fee Discounts: Autopay Eligibility: All states except for ME Customer service: Email, phone, chat Soft credit check: Yes Cosigner release: After 24 - 36 months Min. credit score: Does not disclose Max. undergraduate loan balance: $100,000 - $149,000 Max. graduate loan balance: Less than $150,000 Offers Parent PLUS refinancing: Yes
View details	2.79%+3	2.39%+3	5, 7, 10, 12, 15, 20
Fixed rates from (APR): 2.79%+3 Variable rates from (APR): 2.39%+3 Repayment terms (years): 5, 7, 10, 12, 15, 20 Repayment options: Forbearance Fees: None Discounts: None Eligibility: Must be a U.S. citizen or permanent resident, have at least $15,000 in student loan debt, and have a bachelor’s degree or higher from an approved school Customer service: Email, phone Soft credit check: Yes Cosigner release: No Min. credit score: 680 Max. undergraduate loan balance: No maximum Max. graduate loan balance: No maximum Offers Parent PLUS refinancing: Yes
View details	3.46%+4	2.51%+4	5, 10, 15, 20
Fixed rates from (APR): 3.46%+4 Variable rates from (APR): 2.51%+4 Repayment terms (years): 5, 10, 15, 20 Repayment options: Academic deferment, military deferment, forbearance Fees: Late fee Discounts: Autopay Eligibility: Must be an Indiana resident or a U.S. citizen attending an eligible Indiana school Customer service: Email, phone, chat Soft credit check: Yes Cosigner release: Yes Min. credit score: 670 Max. undergraduate loan balance: $250,000 Max. graduate loan balance: $250,000 Offers Parent PLUS refinancing: Yes
View details	3.05%+	3.05%+	7, 10, 15
Fixed rates from (APR): 3.05%+ Variable rates from (APR): 3.05%+ Repayment terms (years): 7, 10, 15 Repayment options: Military deferment, loans discharged upon death or disability Fees: None Discounts: None Eligibility: Must be a U.S. citizen or permanent resident and have at least $10,000 in student loans Customer service: Email, phone Soft credit check: Yes Cosigner release: No Min. credit score: 670 Max. undergraduate loan balance: No maximum Max. graduate loan balance: No maximum Offers Parent PLUS refinancing: Yes
View details	2.99%+	2.19%+	5, 8, 12, 15
Fixed rates from (APR): 2.99%+ Variable rates from (APR): 2.19%+ Repayment terms (years): 5, 8, 12, 15 Repayment options: Does not disclose Fees: None Discounts: None Eligibility: Must be a U.S. citizen and have and at least $7,500 in student loans Customer service: Email, phone, chat Soft credit check: Yes Cosigner release: After 12 months Min. credit score: 670 Max. undergraduate loan balance: $300,000 Max. graduate loan balance: $300,000 Offers Parent PLUS refinancing: Yes
View details	3.19%+	N/A	5, 10, 15
Fixed rates from (APR): 3.19%+ Variable rates from (APR): N/A Repayment terms (years): 5, 10, 15 Repayment options: Academic deferment, military deferment, forbearance, loans discharged upon death or disability Fees: None Discounts: Autopay Eligibility: Available in all 50 states; must also have at least $7,500 in student loans and a minimum income of $40,000 Customer service: Email, phone Soft credit check: Does not disclose Cosigner release: No Min. credit score: 680 Max. undergraduate loan balance: $150,000 - $249,000 Max. graduate loan balance: $200,000 - $249,000 Offers Parent PLUS refinancing: Yes
View details	2.99%+5	2.25%+5	5, 7, 10, 15, 20
Fixed rates from (APR): 2.99%+5 Variable rates from (APR): 2.25%+5 Repayment terms (years): 5, 7, 10, 15, 20 Repayment options: Academic deferment, military deferment Fees: None Discounts: Autopay, loyalty Eligibility: Available in all 50 states Customer service: Email, phone, chat Soft credit check: Yes Cosigner release: No Min. credit score: Does not disclose Max. undergraduate loan balance: No maximum Max. graduate loan balance: No maximum Offers Parent PLUS refinancing: Yes
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All APRs reflect autopay and loyalty discounts where available | 1Citizens Bank Disclosures | 2College Ave Disclosures | 3 ELFI Disclosures | 4INvestEd Disclosures | 5SoFi Disclosures

About the author

Matt Carter

Matt Carter is a Credible expert on student loans. Analysis pieces he’s contributed to have been featured by CNBC, CNN Money, USA Today, The New York Times, The Wall Street Journal and The Washington Post.

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