Loan Consolidation

The Federal Direct Consolidation Loan Program allows you to combine one or more certain federal student loans and to make one monthly payment to the federal government. If you have multiple student loans you may be able to combine them into one loan with a fixed interest rate based on the average of the interest rates on the loans being consolidated. There is no charge for consolidation, and repayment plans are offered. The interest rate is fixed for the life of the loan and cannot exceed 8.25 percent. You will need to complete the free Federal Direct Consolidation Loan Application and Promissory Note. You will confirm the loans you want to consolidate and agree to repay the new Direct Consolidation Loan. 

For more information, call:

Direct Loan Borrower Services Consolidation at 1-800-557-7392; TDD 1-800-557-7395.

Frequently asked questions on loan consolidation

Pros and cons of loan consolidation

PROS

• Locks in the interest rate
• Allows the borrower to combine loans from multiple lenders into a single repayment schedule (i.e., one monthly payment)
• Allows the borrower a longer repayment period, which will reduce the amount of the borrower's monthly payment
• Allows a borrower to clear an over-award of Stafford loans or clear a defaulted student loan

CONS

• Locks in the interest rate, for older Stafford loans that have a variable interest rate
• May increase the total cost of the borrower's loan, the longer the repayment, the more interest you will pay
• Borrower may have to forfeit all or a portion of the grace period
• Borrower may lose certain borrower benefits related to their current loans
• Certain deferments may be lost; however, borrowers retain their ability to request most major deferments
• Borrowers who consolidate Perkins Loans lose the deferment subsidy and cancellation eligibility options related to Perkins loans

Loans That Can Be Consolidated

Federal Direct Loans and Federal Family Education Loan(s) that are eligible for loan consolidation include:

• Stafford
• PLUS
• SLS
• Previous Consolidation Loans
• Perkins Loans
• Health Professional Student Loans
• Nursing Student Loans
• Health Education Assistance Loans (HEAL)
• Federally Insured Student Loans (FISL)

*Alternative loans are not eligible to be included in a Federal Consolidation Loan