What is loan consolidation?
You can consolidate (combine) multiple federal student loans with various repayment schedules into one loan: either a FFEL Consolidation Loan or a Direct Consolidation Loan, making a single monthly payment.
With a consolidation loan:
Your monthly payment might be lower.
You can take a longer time to repay (up to 25 years).
You will receive a fixed interest rate on your Direct or FFEL Consolidation Loan.
Compare the cost of repaying your unconsolidated loans with the cost of repaying a consolidation loan. Things to consider are:
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.
Whether you might lose some discharge and cancellation benefits if you include a Perkins Loan in your consolidation loan.
Carefully review your consolidation options before you apply.
Talk to the holder of your loan(s) for more information before you consolidate.
If you’re in Default* on a federal student loan, you still might be able to consolidate if you make satisfactory repayment arrangements on the Defaulted loan or agree to repay the consolidation loan under the Income-Contingent or Income Sensitive Repayment Plans, provided the Defaulted loan is not subject to a judgment or wage garnishment.
What kinds of loans can be consolidated? All federal student loans discussed in this guide are eligible for consolidation, and others can be included. To get a complete list of your loans that are eligible for consolidation, contact your lender or the agent servicing your loan(s).
If you’re applying for a:
FFEL Consolidation Loan—Contact your lender or the agent servicing your loan(s).
Direct Consolidation Loan—Contact the Loan Origination Center’s Consolidation Department at 1-800-557-7392. TTY users may call 1-800-557-7395. Or, go to www.loanconsolidation.ed.gov.
FFEL Consolidation Loan—Contact the consolidation department of a participating lender for an application and more information. You may consolidate your loans with any eligible consolidation lender in the FFEL program.
Direct Consolidation Loan—Contact the Direct Loan Origination Center’s Consolidation Department at 1-800-557-7392, or go to www.loanconsolidation.ed.gov. TTY users may call 1-800-557-7395.
What’s the interest rate on a consolidation loan? The interest rate for both Direct and FFEL 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 1 percent. The interest rate will never exceed 8.25 percent.
Are there any disadvantages to getting a consolidation loan? Yes, there could be. For example, consolidation may significantly increase the total cost of repaying your loans. Because you may have a longer period of time to repay, you’ll pay more interest.
You can read more about loan consolidation in our publication Repaying Your Student Loans. You can get a copy online at www.FederalStudentAid.ed.gov/pubs or a paper copy by contacting the Federal Student Aid Information Center at 1-800-4-FED-AID (1-800-433-3243).
Once made, consolidation loans cannot be revoked for any reason because the underlying loans that were consolidated have been paid off and no longer exist.
U.S. Department of Education | Federal Student Aid
