Loan Consolidation

What is Direct Loan consolidation?

A Direct Consolidation Loan allows borrowers to consolidate (combine) multiple federal education loans into one loan.  This provides a single monthly payment under one interest rate, and can also give borrowers access to additional loan repayment plans and forgiveness programs. Consolidation can help borrowers to lower their monthly repayment amount by extending their loan period (up to 30 years), but can result in paying more in interest over the life of the loan. Borrowers can select which of their loans to include in the consolidation. If you choose to consolidate your loans, this cannot be undone, so be sure to consider if consolidating is right for you before completing your application. 

A Direct Consolidation Loan has a fixed interest rate for the life of the loan. The fixed rate is the weighted average of the interest rates on the loans being consolidated, rounded up to the nearest one-eighth of one percent. There is no cap on the interest rate of a Direct Consolidation Loan.

What loans can be consolidated in a Direct Consolidation Loan?

Most federal student loans can be consolidated into a Direct Consolidation Loan (subsidized, unsubsidized, Perkins, etc). Private loans cannot be included in a Direct Consolidation Loan, but private loan consolidation options do exist through private lenders.

Benefits of a Direct Consolidation Loan:

  • A single loan with one monthly payment, under 1 servicer.
  • Possibility to lower your monthly payment amount, with a repayment period up to 30 years.
  • May have access to additional income-driven repayment plans.
  • You’ll be able to switch any variable-rate loans you have to a fixed interest rate (loans disbursed prior to July 1st 2006).

Considerations for a Direct Consolidation Loan:

  • Longer repayment period can mean more monthly payments, and paying more in interest than leaving loans unconsolidated.
  • Any outstanding interest on the loans you consolidate becomes part of the original principal balance on your consolidation loan.
  • Possible loss of borrower benefits (interest rate discount, principal rebates, loan cancellation benefits).
  • Consolidation can result in losing credit for payments made under income-driven plans, or for those pursuing loan forgiveness.
  • Consolidation cannot be undone - the individual loans cease to exist.

How to consolidate Federal loans?

You can complete a loan consolidation application at: