Loan Consolidation

Consolidation loans combine several student or parent loans into one bigger loan from a single lender, which is then used to pay off the balances on the other loans. Consolidation loans are available for most federal loans, including FFELP (Federal Family Education Loan Program) and Direct Loan Stafford and PLUS loans.

Factors to consider

Factors to consider when deciding if you should consolidate:

  • If you have trouble meeting your monthly payments, have exhausted your deferment or forbearance options and/or want to avoid default, a consolidation loan might help you.
  • If you send payments to more than one lender each month and would like the convenience of a single monthly payment, you should explore consolidating your loans.
  • If you have variable interest rates on your federal education loans, you may want to consolidate.
  • The consolidation loan extends the years of repayment and thus, the total amount you have to repay.
  • If you are close to paying off your student loans, it may not be worth the effort to consolidate.

FinAid's Loan Consolidation Calculator can help you understand the tradeoffs of consolidating your loans. It compares the reduction in the monthly loan payment with the increase in the total interest paid over the lifetime of the loan. It also shows you the interest rate on your consolidation loan.

FinAid has a page of common questions about consolidation.

Direct Consolidation Loans

Due to the Health Care and Education Reconciliation Act of 2010 (HR 4872), FFEL Program lenders are no longer offering consolidations. You can consolidate your loans using the U.S. Department of Education’s Federal Direct Loan Consolidation program.


Direct Loan Consolidation

Interest Rates

The interest rate for a Direct Consolidation Loan is fixed for the life of the Direct Consolidation Loan. The rate is based on the weighted average interest rate of the loans being consolidated and cannot exceed 8.25%.

Repayment Options

Consolidation loans provide access to several alternate repayment plans besides standard ten-year repayment. These include extended repayment, graduated repayment, income contingent repayment and income-based repayment (IBR). If you do not specify the repayment terms, you will receive standard ten-year repayment.


Aside from a slight increase in the interest rate on the consolidation loan, there is no cost to consolidate your loans. There are no fees to consolidate.

Minimum or Maximum Loan Amounts

There is no minimum amount required to qualify for a Direct Consolidation Loan.

Deferment Options

If borrowers have exhausted the deferment options on their current Federal education loans, a consolidation loan may renew those deferment options. In addition, borrowers may be eligible for additional deferment options if they have an outstanding balance on a FFEL Program loan made before July 1, 1993, when they obtain their first Direct Loan.


Must have at least one Direct Loan or FFELP loan that is in grace, repayment, deferment or default status. Loans that are in an in-school status cannot be included in a Direct Consolidation loan. For more details, visit Direct Consolidation Loans.

Which loans can be consolidated?

Subsidized and unsubsidized Federal Stafford (FFELP and Direct), consolidation loans, FFELP and Direct PLUS loans.

To apply and for more information

Visit Direct Consolidation Loans.

For more details, visit FinAid's SmartStudent™ Guide to Financial Aid for more information on loan consolidation.

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