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From the Experts at

How to Consolidate Student Loan Debt

by Lucy Lazarony

How to Consolidate Student Loan Debt

All those different student loans came in handy when you were financing your college education.

But making multiple monthly payments each month can be a real hassle.

Simplify your life and consolidate your debt with a consolidation loan.

Federal Consolidation Loans

A direct consolidation loan allows you to consolidate several federal student loans into a single loan.  So you’ll have just one loan payment to make each month instead of many.

Consolidating your student loans also can significantly lower your monthly payment by extending the repayment period on your new loan by up to 30 years.

Recent grads feeling squeezed by student loan payments may wish to consolidate their loans and give themselves a little more breathing room in their monthly budgets.

Extending the loan does increase the amount of interest you will pay over the life of the loan, so it’s smart to pay more than the monthly payment whenever you can.  And because there are no penalties for prepayment, you can pay ahead on a direct consolidation loan any time you wish.

There is no application fee when you apply for a direct consolidation loan and the fixed interest rate that you pay depends on the interest rates of the loans you are consolidating.

The interest rate on a direct consolidation loan is based on the weighted average of the interest rates of the federal loans being consolidated, rounded up to the nearest one-eighth of 1 percent.

You can apply for a direct consolidation loan through

Private Consolidation Loans

Private student loans cannot be included in a direct consolidation loan for federal student loans.

But you can consolidate private loans into a private consolidation loan. Interest rates on private consolidation loans are based on your credit score and are determined by the lender, as are fees and whether or not there are prepayment penalties for paying ahead on the loan.

If your credit score has climbed since you first took out your private student loans, you may want to think about consolidating your loans to nab a lower interest rate. If you don’t know where you stand with your credit score, you can check two of your credit scores for free through  You can also get a personalized plan to build your credit over time.

Whether you are consolidating federal or private student loans, be sure to make on-time payments on your student loans until the consolidation is complete and your old loans are paid off.

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