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Loan Consolidation

A Direct Consolidation Loan allows a borrower to consolidate (combine) multiple federal student loans into one loan. The result is a single monthly payment instead of multiple monthly payments.

Make sure to carefully consider whether loan consolidation is the best option for you. While loan consolidation can simplify loan repayment and lower your monthly payment, it also can significantly increase the total cost of repaying your loans. Consolidation offers lower monthly payments by giving you up to 30 years to repay your loans. But, if you increase the length of your repayment period, you'll also make more payments and pay more in interest than you would otherwise. In fact, in some situations, consolidation can double your total interest expense. If you don't need monthly payment relief, you should compare the cost of repaying your unconsolidated loans against the cost of repaying a consolidation loan.

You also should take into account the impact of losing any borrower benefits offered under repayment plans for the original loans. Borrower benefits from your original loan, which may include interest rate discounts, principal rebates, or some loan cancellation benefits, can significantly reduce the cost of repaying your loans. You may lose those benefits if you consolidate.

Once your loans are combined into a Direct Consolidation Loan, they cannot be removed. That's because the loans that were consolidated have been paid off and no longer exist. Take the time to study the pros and cons of consolidation before you submit your application.

For additional information, you can view the Checklist Tool for Consolidation or visit

What kinds of loans can be consolidated?

Most federal student loans are eligible for consolidation, including subsidized and unsubsidized Direct and FFEL Stafford Loans, Direct and FFEL PLUS Loans, Supplemental Loans for Students (SLS), Federal Perkins Loans, Federal Nursing Loans, Health Education Assistance Loans, and some existing consolidation loans. Private education loans are not eligible for consolidation. If you are in default, you must meet certain requirements before you can consolidate your loans.

Note: A PLUS Loan made to the parent of a dependent student cannot be transferred to the student. Therefore, a student who is applying for loan consolidation cannot include his or her parent’s PLUS Loan.

For a complete list of the federal student loans that can be consolidated, contact the Direct Loan Origination Center's Consolidation Department by calling 1-800-557-7392 or visit TTY users may call 1-800-557-7395.

Note: Before July 1, 2010, Stafford, PLUS, and Consolidation Loans were also made by private lenders under the Federal Family Education Loan (FFELSM) Program. As a result of recent legislation, no further loans will be made under the FFEL Program beginning July 1, 2010. All new Stafford, PLUS, and Consolidation Loans will come directly from the U.S. Department of Education under the Direct Loan Program.

When can I consolidate my loans?

Generally, you are eligible to consolidate after you graduate, leave school, or drop below half-time enrollment.

What are the requirements to consolidate a loan?

To qualify for a Direct Consolidation Loan:

  • You must have at least one Direct Loan or Federal Family Education Loan (FFEL) that is in grace or repayment.

  • You can consolidate most defaulted education loans if you make satisfactory repayment arrangements with the current loan servicer(s) or agree to repay your new Direct Consolidation Loan under the Income Contingent Repayment Plan or the Income Based Repayment Plan.

  • If you have a Direct Consolidation Loan, you cannot consolidate again unless you include an additional FFEL or Direct Loan. If you have a FFEL Consolidation Loan you also may be able to consolidate again under certain circumstances. For additional details, go to

If you consolidate your loans, you do not need to pay any application fees and you will not be charged any prepayment penalties.

What is the interest rate?

A Direct Consolidation Loan has a fixed interest rate for the life of the loan. The fixed rate is based on the weighted average of the interest rates on the loans being consolidated, rounded up to the nearest one-eighth of 1% and cannot exceed 8.25%.

How do I apply for a Direct Consolidation Loan?

There are several ways that you can apply for a Direct Consolidation Loan:

When do I begin repayment?

Repayment of a Direct Consolidation Loan begins immediately upon disbursement of the loan. (Your first payment will be due within 60 days.) The payback term ranges from 10 to 30 years, depending on the amount of education debt being repaid and the repayment plan you select. Direct Consolidation Loans that include parent PLUS loans are not eligible for the Income-Based Repayment Plan. For additional details on repayment plans available for Direct Consolidation Loans, go to the Loan Consolidation Web site or check with your loan servicer.

Repayment Plans—There are several repayment plans that are designed to meet the different needs of individual borrowers. You will receive more detailed information on your repayment options when you consolidate your loan. To learn more about repayment plans, go to the Repayment Information page on this Web site.

What if I have trouble repaying the loan?

Under certain circumstances, you can receive a deferment or forbearance that allows you to temporarily stop or lower the payments on your loan. For more information, go to the Repayment Information page on this Web site.

Can my loan be cancelled (discharged)?

Yes, but only under a few circumstances. For more information, go to the Cancellation/Discharge page on this Web site.

Last updated/reviewed June 29, 2010

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