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How to Consolidate Your Student Loans

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consolidate student loans

If you’re having a tough time juggling multiple student loan payments, consolidating them may be the way to go. Consolidating your student loans means combining several loans into a single loan, meaning all those monthly payments get rolled into one. One loan, one interest rate, one payment. Sound good? Here’s how to do it.

How to Consolidate Your Federal Student Loans

You can apply for a Direct consolidation loan from the U.S. Department of Education through You can apply electronically or get a paper application. When you apply, you select a student loan servicer and a repayment plan (learn more about repayment plans here). You’ll want to review the loan terms and conditions, as well as other borrower information, before signing and submitting the application.

Any questions you have about your loan application should go to the student loan servicer you selected for your consolidation loan. When you apply for a Direct consolidation loan, you will want to continue to make payments on your federal student loans right up until you receive notice from your federal student loan servicer that your loan has been paid off. Failing to make student loan payments can negatively affect your credit, as well as result in late-payment fees, which is why it’s so important you keep up with your payments until your consolidation loan has been finalized. If you have questions about consolidation before you apply, you can contact the Education Department’s Loan Consolidation Information Call Center at 1-800-557-7392.

Does Consolidation Lower My Student Loan Payments?

A Direct consolidation loan allows you to consolidate multiple federal education loans into a single loan so you’ll have a single loan payment to make each month, instead of three or four or more. It also may lower your monthly payments by giving you as long as 30 years to repay.

While consolidating federal student loans may give you a much-needed break on your monthly student loan payments, that lower monthly payment amount comes with a price. By increasing your loan repayment period, you’ll have more payments to make and will end up paying more in interest.

Are There Fees for Consolidating Student Loans?

There are no prepayment penalties with a Direct consolidation loan, so feel free to pay more when you have the extra cash — it’ll help you save on interest. And there is no application fee when you apply.

Can I Consolidate Private Student Loans?

Private or alternative student loans cannot be consolidated into a Direct consolidation loan.

According to the Education Department, federal loans eligible for a Direct consolidation loan include: Subsidized and unsubsidized Direct loans, subsidized and unsubsidized Stafford loans, Direct PLUS loans, PLUS loans from the Federal Family Education Loan (FFEL) Program, Supplemental Loans for Students (SLS), Perkins loans, Health Education Assistance Loans (HEAL), federal nursing loans and some existing consolidation loans.

What’s the Interest Rate on a Federal Consolidation Loan?

A Direct consolidation loan has a fixed interest rate. The loan rate you will pay is based on the weighted average of the interest rates on the federal loans that you consolidate, rounded up to the nearest one-eighth of 1%.

Once you consolidate your federal education loans into a Direct consolidation loan, there is no going back. When you consolidate your loans into one new loan, all your previous student loans are paid off.

As you pay down your student loans, it’s a good idea to keep track of your credit score. Paying on time, over time, can help you build — or maintain — good credit. You can see how your student loans factor into your credit standing by getting two of your credit scores for free on

To learn more about student loans and how they impact your credit, read more from our experts by visiting our Student Loan Learning Center.

This article has been updated. It was originally published May 8, 2014.

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  • Gerri Detweiler

    Really the best way to find out if you can discharge the student loan debts in bankruptcy is to talk with an experienced bankruptcy attorney. The consultation should be free or at low cost. We’re not attorneys so it wouldn’t be wise for us to try to advise you are speculate on your case. This article may be of interest:
    How to Get Your Student Loans Forgiven in Bankruptcy

  • Jennifer Gottfried

    If you are deemed permanently and totally disabled, you may be able to get all of your student loans forgiven without bankruptcy. Sally Mae does not easily discharge student loans when a school closes due to ethical problems, but you may check to see if they have, and maybe your servicer just didn’t get the notice. In bankruptcy, you may (I stress MAY, not automatically), be able to get all of the loan amounts not directly used toward tuition discharged, but they won’t likely discharge the amount that was used to directly pay tuition. If you took out loans that were more than tuition, this may be one way to get them lowered and more affordable, if you are not considered totally and permanently disabled. I would definitely talk to an attorney, both a bankruptcy attorney and a NON-bankruptcy financial attorney (bankruptcy attorneys have a vested interest in leading you to bankruptcy) before making any decisions. I hope you feel better, and can eventually do what you love!

  • Katherine

    The Income Based Repayment program and the Pay As You Earn program are the two programs that will assist federal student loan borrowers, based on your income, marital status and family size.

  • Gerri Detweiler

    Liz – Private student loan consolidation is possible but it doesn’t work like federal loan consolidation. You have to be able to qualify based on your income and creditworthiness, and some companies also look at your major/what school you went to etc.

  • Gerri Detweiler

    Hi Liz – here is our article on that topic: How to Consolidate Private Student Loan Debt

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