Loan Consolidation

Loan consolidation allows you to refinance any or all eligible outstanding federal student loans and create a single new loan with one monthly payment. The new loan will have a fixed interest rate, new terms, and may have an extended repayment period of up to 30 years.

Both the Federal Family Education Loan Program (FFELP) and the Direct Loan Program offer loan consolidation. FFELP loan Consolidation is available from participating lenders, and Direct consolidation loans are available from the federal government. Alternative consolidation options are also available through private lenders. However, benefits, repayment options and application procedures vary.

Loan consolidation is not for everyone. Before choosing loan consolidation, be sure to review all your options.


Who is eligible for loan consolidation?

To be eligible for loan consolidation, you must agree to the terms and conditions listed on the Application and Promissory Note, which include:

  • You are not enrolled in school, or you are enrolled on a less than half-time basis.
  • You are in the "grace period" or already in repayment on EACH loan you have chosen to consolidate.
  • If you are in default, you must either make satisfactory repayment arrangements with your current lender or agree to repay the consolidating lender under an income-sensitive repayment plan.
  • You must agree to notify the lender of any address changes.
  • Spouses may also consolidate their eligible loans


Your alternatives depend on what you plan to accomplish by consolidating

  • Need a lower monthly payment? If a lower monthly payment is your goal, your current lender/loan holder may already offer an alternative option.
  • Temporarily struggling to keep up with your loan payments? If meeting your monthly payment is difficult, consider deferment or forbearance options that allow eligible borrowers to temporarily postpone or reduce monthly payment.
  • Juggling too many payments with one lender? If one lower monthly payment is your intention, ask about “serialization”, the combining of all loans held by one lender. It allows your lender to create one monthly payment that is proportionally applied across all of the underlying loans. Multiple loans with one lender are often "serialized" automatically.


Advantages and Considerations of Student Loan Consolidation

This chart lists the features of loan consolidation, along with some considerations to help you decide if consolidation is the right option for you.

Features Advantages Considerations
One lender holds the loan.
  • You'll always know whom to contact
  • You receive only one bill.
  • Other lenders may offer better deals, prepayment incentives and other benefits.
A fixed interest rate.
  • If you consolidate while rates are low, you'll lock in a low interest rate. If rates rise, you'll save money.
  • If interest rates fall in the future, you'll be locked into a higher rate.
Separate federal student loans are combined into one loan.
  • Only one payment to make every month.
  • Subsidized FFELP and Direct Loans retain their interest subsidy benefits during deferment if consolidated during prepayment.
  • Non-federal loans, such as college or private alternative loans, cannot be included.
  • Possible loss or change in benefits,. Previous loans will be combined into on a new loan with a new set of benefits that may include different deferment and forbearance options. Check with your lender and compare.
No fees, credit check or prepayment penalties.
  • You may pay off the loan at any time without penalty.
  • Some lenders require a minimum loan balance to apply.
An extended repayment period from 10 to 30 years, depending on your total debt.
  • Usually, a lower monthly payment.
  • Typically, a significant higher payback. An extended payment period means paying more interest over the life of the loan.
Four repayment plan options: standard, graduated, income-sensitive or extended.
  • You can choose the prepayment plan that best fits into your financial situation or future plans
  • Same repayment plans as those offered under FFELP Program, but with the option of an extended repayment term.
  • Minimal reduction in the principal amount owed.
  • Increase in total loan costs.

Loan Information

If you need information on your loans, you can access the National Student Loan Data System, the U.S. Department of Education's central database for all federal student aid records (private loans are not listed).

  • Visit National Student Loan Data System for Students - your U.S. Department of Education PIN will be required
    (the same one used in the online FAFSA).
  • You'll see a listing of your federal student loans with the amounts, dates of origination and outstanding balances.