Applying to consolidate federal student loans isn’t difficult. In fact, it’s possible to do it online in under 30 minutes. What may take more time is deciding whether consolidation is a good step for you. Changes that went into effect July 1, 2026, reduce your repayment plan options if you consolidate, so consolidation isn’t as beneficial as it once was.
When you consolidate, you combine multiple federal student loans into a single, new federal loan called a Direct Consolidation Loan. Student loans through a private lender can’t be included in a Direct Consolidation Loan.
To combine federal and private student loans into one new loan, you would need to refinance your student loans with a private lender — ideally at a lower interest rate. Private lenders sometimes refer to student loan refinancing as consolidation, but they are not the same thing.
If you’re thinking about consolidating your federal student loans, here’s what you need to know.
How to consolidate federal student loans
You can consolidate federal student loans once you graduate, leave school or drop below half-time enrollment. You cannot consolidate while you're still in school. The loans you consolidate must be in repayment or in a grace period. Here are the steps to take.
Go to the Direct Consolidation Loan application page at studentaid.gov. You can walk through a demo but must log in to your account to actually apply. The U.S. Department of Education (ED) “highly recommends” applying online, but you can find instructions to submit a paper application in the FAQs on the page.
Gather your information. To make applying faster, gather the information listed in the “What Do I Need?” section of the application before you start. ED estimates the process should take less than 30 minutes, but the application doesn’t have to be completed in one sitting. You can save it and finish it later.
Confirm or update personal information. You’ll be asked to review your personal information currently on file and update it if necessary.
Make your selections. The application will ask you:
Which loans you’d like to consolidate. (You don’t have to consolidate all of them.)
Which student loan servicer you want going forward.
Which repayment plan you want. When you consolidate, you’re limited to the Repayment Assistance Plan (RAP) or the Tiered Standard Repayment Plan. (Parent PLUS consolidation loans are limited to the Tiered Standard Repayment Plan.)
Provide your references. Confirm that your two references on file are still accurate or submit the name, address and phone numbers of new ones. References must have known you for at least three years and can’t have the same address or phone number as you. (ED only uses these references if it is unable to contact you directly; your references are never responsible for repaying your loan.)
Review, sign and submit. Read the terms and conditions and details of your consolidated loan. If everything is as you expected, sign and submit it.
Reach out for help. If you have any questions before applying, contact your current loan servicer. You can also get assistance by calling the Federal Student Aid Information Center (FSAIC) at 1-800-433-3243 before applying and when you’re logged in completing the application.
» CALCULATOR: See your estimated payment if you consolidate
What happens when you consolidate federal student loans?
Your loans are replaced. When you consolidate federal student loans, the government pays them off and replaces them with a new, single Direct Consolidation Loan.
Your interest rate is recalculated. Your new fixed interest rate will be the weighted average of your previous loan 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%.
Unpaid interest will capitalize. If you have unpaid interest when you consolidate, it will capitalize. That means the amount you owe in interest will be added to the principal balance of your new loan, and you'll pay interest on that larger balance going forward. (Find the amount of interest you owe on your account’s main dashboard at studentaid.gov.)
Your repayment terms change. The term of your new loan depends on the repayment plan you choose. Under RAP, balances are forgiven after 30 years of qualifying payments or 10 years if you’re eligible for Public Service Loan Forgiveness (PSLF). The Tiered Standard Repayment Plan has terms ranging from 10 to 25 years, depending on your total federal Direct Loan balance when you enter repayment. It does not qualify for PSLF.
Payments start within 60 days. Expect to begin making payments within 60 days of when your consolidation loan is disbursed or paid out, even if you have a longer grace period remaining on any of your loans. If at least one loan that you apply to consolidate is still in a grace period, you can request delayed loan processing (closer to the grace period end date) on the consolidation application.
Reasons to consolidate federal student loans
Recent changes to federal student loans make consolidating less beneficial for many borrowers, but there are still valid reasons to consider consolidation.
You want a single monthly student loan payment, so it’s easier to manage payments and make them on time.
You have defaulted student loans and want to use consolidation to get back into good standing. It’s important to note that rehabilitation is another option for defaulted borrowers.
You have older Federal Family Education Loans (FFEL) or Perkins Loans and want to move them into the Direct Loan program to repay under RAP and qualify for PSLF.
You want a single loan servicer and a choice of which company it is.
You will be able to pay less monthly with a consolidation loan.
Why you might not want to consolidate student loans
Student loan changes in 2026 created more reasons to avoid consolidating student loans. Before you move forward with consolidation, be aware of the following:
You will lose access to older repayment plans, which could have a lower payment. All consolidation loans disbursed on or after July 1, 2026, are considered a new loan and repayment is limited to RAP or the Tiered Standard Repayment Plan.
You could lose PSLF progress. Payments you've already made that counted toward PSLF carry forward as a weighted average based on loan balance. If you consolidate a high-balance loan with a short payment history and a smaller loan with a long payment history, you could lose some of your already-earned forgiveness credit.
You could pay more. Consolidation may stretch your loans to a longer repayment period — up to 25 years on the Tiered Standard Repayment Plan or 30 years of payments before forgiveness under RAP. While a longer repayment period could lower your monthly payment, it means you will pay significantly more in interest over the life of the loan. Also, if you have unpaid interest on your previous loans, that’s added to the principal balance of your consolidation loan, meaning you’ll pay interest on a higher balance.
If you still have a parent PLUS loan, consolidating now would limit you to repaying with the Tiered Standard Repayment Plan. You would lose access to all legacy plans, and you aren’t eligible for RAP.
Before consolidating, contact your loan servicer to confirm how it will impact your repayment choices and forgiveness benefits.
When does refinancing make more sense than consolidating?
Refinancing with a private lender — such as a bank, credit union or online lender — may be a better option than federal loan consolidation for some student loan borrowers.
If you have both federal and private student loans, private lenders will enable you to combine both into one refinance loan.
Private lenders also take into account your personal financial situation and credit score when determining your interest rate, something not used for federal student loan rates. Lenders make the final call, but if you have a good credit score (at least the high 600s) and steady income, you may qualify for a lower private loan rate than you get with a federal Direct Consolidation Loan.
With most private lenders, you can choose from a range of loan terms — also not an option with federal loans. A shorter term will increase your monthly payment and lower interest costs. A longer term will lower your monthly payment while increasing the amount of interest you pay. With private lender refinancing, you have the flexibility to choose which term will work best for you.
The downside of refinancing with a private lender is the loss of federal benefits, such as income-driven repayment and loan forgiveness. Before refinancing, make sure you won’t lose access to benefits you might later need.
