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How to Consolidate Your Student Loans

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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.

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    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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