Consolidating your federal education loans

With a Direct Consolidation Loan, you can consolidate two or more federal education loans into one. Instead of having two or more different loans to repay, you will only have one loan to manage and you will only be making one repayment each month instead of two or more.

There are both advantages and disadvantages tied to the consolidation of loans, so it is important that you do your homework and investigate the repercussions for your particular situation before you apply for a consolidation. Your individual situation must be taken into account; consolidation can be a great choice for one person and a poor choice for another.

How early can I consolidate?

This depends on your individual situation, but you are normally not allowed to consolidate federal student loans until you leave school (with or without graduating first) or drop below half-time enrollment.

Which loans can be consolidated into a Direct Consolidation Loan?

Most federal student loans can be consolidated using the Direct Consolidation Loan.

Here are a few examples of eligible federal student loans:money

  • Subsidized Federal Stafford Loans
  • Un-subsidized Federal Stafford Loans
  • PLUS loans from the Federal Family Education Loan (FFEL) Program
  • Federal Perkins Loans
  • Supplemental Loans for Students
  • Loans for Disadvantaged Students
  • Nursing Student Loans
  • Nurse Faculty Loans
  • Health Education Assistance Loans
  • Health Professions Student Loans

Important: A Direct PLUS Loan received by a parent to help pay for a dependent student’s education cannot be consolidated together with federal student loans that the student themselves received.

Can I use the Direct Consolidation Loan to consolidate private student loans?

No, private student loans are not eligible for consolidations with the Direct Consolidation Loan.

Advantages of consolidating

  • Making just one repayment each month instead of several.
  • Loan consolidation may give you access to additional loan repayment plans and forgiveness programs.
  • In some situations, loan consolidation can make it possible to reduce the size of the monthly repayment by increasing the repayment time. (This will however entail paying more in interest, so the loan will end up costing you more before it has been repaid in full.)
  • In some situations, loan consolidation can make it possible to switch the interest rate from variable-rate to fixed-rate.

Disadvantages of consolidating

  • Consolidation can make you lose certain borrower benefits, such as interest rate discounts, loan cancellation benefits and/or principal rebates.
  • If the debtor is paying their current loans under an income-driven repayment plan, or if they’ve made qualifying payments toward Public Service Loan Forgiveness, consolidating their current loans will cause them to lose credit for any payments made toward income-driven repayment plan forgiveness or Public Service Loan Forgiveness.
  • As mentioned above, consolidation is often used to prolong he repayment period, thereby lowering the size of the monthly payment. The longer the repayment period, the longer you will be paying interest on the loan, so this choice can be a costly one.

Prolonging the repayment period is not mandatory when consolidating. Carefully weigh your options before you make a decision.

Can I separate the loans after a consolidation?

No, you can’t. Once your loans have been consolidated into one loan, they can not be separated again. You have taken out a Direct Consolidation Loan and used that money to repay your old loans, so those old loans do no longer exist. All you have is your new loan: the Direct Consolidation Loan.

Do I have to pay any application fee to apply for consolidation?

payNo, you don’t. No application fee is charged to consolidate federal student loans into a Direct Consolidation Loan.

There are private companies that approach students and offer to help them with consolidation for a fee. There is no need to use a company like that, since applying for a Direct Consolidation Loan is easy and free of charge.

You apply for consolidation through You can apply online or on a paper application that you send in by mail.

I need help

Before and during the consolidation process, there are resources available that can help you for free.

I haven’t applied The Loan Consolidation Information Call Center will be able to give you more information about the advantages and disadvantages, and they can also help you fill out the application form if you decide to apply for consolidation. The phone number is 1-800-557-7392.

I have applied! Once you have applied for consolidation, you can get help from the servicer of the Direct Consolidation Loan that you applied for. F

Alternatives to consolidation

If you are struggling to make the monthly repayments on your student loans, consolidation is one of several venues to explore. In some situations other solutions are better, such as deferment or forbearance, or applying for an income-driven repayment plan.