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How to Consolidate Your Student Loans
You can consolidate multiple federal student loans into a single, new federal loan on studentaid.gov. To consolidate (a.k.a. refinance) private student loans, go directly to a private lender.
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Eliza Haverstock is NerdWallet's higher education writer, where she covers all aspects of college affordability and student loans. Previously, she reported on billionaires and investing for Forbes in New York, and she also covered private markets for PitchBook in Seattle. Eliza got started at her college newspaper at the University of Virginia and interned for Bloomberg, where she spent a summer writing a feature story about plastic straws. She is based in Washington, D.C.
Karen Gaudette Brewer leads the Core Personal Finance team at NerdWallet. Previously, she guided students and their families through the ins and outs of paying for college and managing student debt on the Higher Education team. Helping people navigate complex money decisions and feel more confident brings her great joy: as the daughter of an immigrant, from an early age she was the translator of financial documents and the person who called the credit card company to fix fraud.
She joined NerdWallet with 20 years of experience working in newsrooms and leading editorial teams, most recently as executive editor of HealthCentral. She launched her journalism career with The Associated Press and later worked for The (Riverside) Press-Enterprise, The Seattle Times, PCC Community Markets and Allrecipes.com.
She is a graduate of the 2022 Poynter Institute Leadership Academy for Women in Media. Her writing has been honored by the Society for Features Journalism and the Society of Professional Journalists. In addition, she’s the author of two books about the Pacific Northwest.
Anna Helhoski is a senior writer covering economic news and trends in consumer finance at NerdWallet. She is an on-air contributor and producer of Money News segments for NerdWallet's Smart Money podcast. She is also an authority on student loans. She joined NerdWallet in 2014. Her work has been syndicated in news outlets nationwide including The Associated Press, The New York Times, The Washington Post, The Los Angeles Times and USA Today. She previously covered local news in the New York metro area for the Daily Voice and New York state politics for The Legislative Gazette. She holds a bachelor's degree in journalism from Purchase College, State University of New York.
Trea S. Branch is a former NerdWallet writer focused on student loan refinancing. She holds a degree in economics from the University of Michigan and a degree in business from the University of Notre Dame. Trea shared her own student loan payoff journey through a blog, which turned into a personal finance coaching business. Her goal has been to empower anyone overwhelmed by student debt.
Lead Writer
Student loan consolidation combines multiple federal student loans into a single, new federal loan. This can simplify your payments, lower your monthly bill and lengthen your repayment term. Consolidation is also an option for borrowers with defaulted student loans.
Alternatively, you can trade in multiple federal or private loans for one, new private student loan — ideally at a lower interest rate. This consolidation process is called a student loan refinance.
If you’re thinking about consolidating your student loans, here’s what you need to know.
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You’re generally eligible for federal student loan consolidation once you graduate, leave school or drop below half-time enrollment. You cannot consolidate while you're still in school. There is no credit requirement, but there is also no chance of a lower interest rate.
Consider federal student loan consolidation if you:
If your student loans are in default, consolidation is typically one of a few methods to get your loans back on track. To consolidate defaulted loans you'll need to make three full, on-time consecutive monthly payments on the defaulted loan or agree to enroll in an income-driven repayment plan.
What happens when I consolidate?
When you consolidate federal loans, the government pays them off and replaces them with a new loan called a “direct consolidation loan.” Your new fixed interest rate will be the weighted average of your previous rates, rounded up to the next one-eighth of 1%. So, for instance, if the weighted average comes to 6.2%, your new interest rate will be 6.25%.
If you have unpaid interest, it can capitalize when you consolidate. That means the amount you owe in interest will be added to your principal balance. This can increase the amount you owe, since interest will build on a larger sum going forward. Check how much interest you’ve accrued by logging into your studentaid.gov account. On your main dashboard, your total debt owed will be broken down by principal and interest.
Your new loan term could range from 10 to 30 years, depending on your total student loan balance and the repayment plan you select. Repayment will typically start within 60 days of when your consolidation loan is first disbursed.
Consolidating your federal loans through the Department of Education is free; steer clear of companies that charge fees to consolidate them for you.
How to consolidate federal loans
Log in to studentaid.gov to access the online direct consolidation loan application. You’ll need to finish the application in one session, so gather the documents listed in the “What do I need?” section before you start, and set aside about 30 minutes to fill it out.
You don’t have to consolidate all of your loans. The application will ask you which loans you’d like to consolidate, which student loan servicer you want going forward and which repayment plan you want to sign up for. It will also ask you to supply references. (The Education Department only uses these references if it is unable to contact you directly; your references are never responsible for repaying your loan.)
Reach out to your current servicer if you have any questions, or contact the Federal Student Aid Information Center (FSAIC) at 1-800-433-3243.
🤓Nerdy Tip
Though consolidation keeps your loans in the federal system, it can still impact your loan forgiveness eligibility, particularly if you have specific loan types. For example, if you have Perkins loans, consolidation will make you ineligible for Perkins loan forgiveness. It could also impact your progress toward Public Service Loan Forgiveness. Before consolidating, reach out to your servicer to confirm that you won’t lose any loan forgiveness benefits that could help you.
Consolidation vs. refinance: What’s the difference?
Refinancing and consolidating may sound similar, but there are some key differences:
Consolidation through the Education Department is only available for federal student loans and does not lower your interest rate, though you can extend your loan term to lower your monthly payments.
Refinancing is available for both private and federal student loans through a private lender. It can save you money if you can lock in a lower interest rate.
Private student loan refinancing requires borrowers or their co-signers to have good or excellent credit and steady income.
Use NerdWallet’s student loan consolidation calculator to compare your monthly student loan payment under consolidation, refinance and income-driven repayment.
You should consolidate your federal loans if you want to make a single monthly payment or need to consolidate to qualify for programs like Public Service Loan Forgiveness. If you want to save money by lowering your interest rate, consider private loan consolidation — also known as refinancing.
Can you consolidate federal student loans?
You can consolidate multiple federal student loans into one loan with the Department of Education. This gives you a single payment to manage versus several. You can also consolidate your federal loans with a private lender, also called refinancing. Refinancing federal loans could result a lower interest rate, but it also removes access to government programs, like income-driven repayment and Public Service Loan Forgiveness.
How do I consolidate my student loans?
You can consolidate federal student loans for free with the Department of Education at studentaid.gov. If you want to consolidate — or refinance — your loans with a private lender, apply directly on the lender's website.
Should I consolidate my student loans?
You should consolidate your federal loans if you want to make a single monthly payment or need to consolidate to qualify for programs like Public Service Loan Forgiveness. If you want to save money by lowering your interest rate, consider private loan consolidation — also known as refinancing.
Can you consolidate federal student loans?
You can consolidate multiple federal student loans into one loan with the Department of Education. This gives you a single payment to manage versus several. You can also consolidate your federal loans with a private lender, also called refinancing. Refinancing federal loans could result a lower interest rate, but it also removes access to government programs, like income-driven repayment and Public Service Loan Forgiveness.
How do I consolidate my student loans?
You can consolidate federal student loans for free with the Department of Education at studentaid.gov. If you want to consolidate — or refinance — your loans with a private lender, apply directly on the lender's website.
