Consolidating Repayment

Loan consolidation is the process of combining several student loans into one new loan. You may be able to combine your federal student loans into a single new loan with a Direct Consolidation Loan. As shown below, there are several reasons why loan consolidation might be helpful. 

  • The loans included in the Direct Consolidation Loan will be paid when the loan disburses.
  • You will receive a new repayment schedule based on the amount of your Direct Consolidation Loan, the loan interest rate and the repayment plan chosen.
  • Standard, graduated, extended, income-contingent, and income-driven repayment plans are available.
  • Direct Consolidation Loans provide deferment and forbearance options.

Loan consolidation requires research and careful consideration. Consolidation may be a helpful strategy for successful repayment if you:

  • Need to reduce your total monthly loan payments
  • Have multiple loan servicers
  • Have loans with variable interest rates (interest rates for the loan that change yearly)
  • Want to make FFEL, Perkins, and Nursing loans eligible for Public Service Loan Forgiveness

Reduction of monthly payment vs. increase in total interest paid

Consolidated loans can have longer repayment periods than unconsolidated loans, which provides the advantage of having lower monthly payments. However, the downside to this is that, since the repayment period is longer, more interest generates over the life of the loan. The Direct Consolidation Loan application will include estimated repayment information under eligible repayment plans.


All amounts estimates.

A graduate’s multiple student loans total $29,000.

  • Total of monthly payments: $319
  • Interest rates: 3.4% to 6.8%
  • Total interest over life of loans: $6,669
  • Total paid over life of loans: $35,669

A graduate’s multiple loans become a single consolidated loan with standard repayment totaling $29,000.

  • Single monthly payment: $183
  • Interest rate: 4.5%
  • Total interest over life of consolidated loan: $15,032
  • Total paid over life of consolidated loan: $44,032

With a consolidated loan, a graduate pays $136 less per month, but pays an additional $8,363 in interest over the life of the loan.

Find more information with the additional calculators below, or at your loan servicer’s website:


To qualify for a Direct Consolidation Loan, you must have eligible loans — such as at least one Direct Loan or Federal Family Education Loan (FFEL) — 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.

  • If you do not have Direct Loans, you may be eligible for a Direct Consolidation Loan under the following conditions:
    • Either you include at least one FFEL loan and have been unable to obtain a Direct Consolidation Loan with a FFEL consolidation lender,
    • Or you have been unable to obtain a Direct Consolidation Loan with income-sensitive repayment terms acceptable to you,
    • Or you intend to apply for loan forgiveness under the Public Service Loan Forgiveness Program.
  • If you have only a Direct Consolidation Loan, you cannot consolidate again unless you include an additional eligible loan.
  • Federal nursing student loans are eligible to be included in a Direct Consolidation Loan.
  • If you are delinquent or in default, you may have certain requirements to meet before you may consolidate loans. Contact your loan holder or servicer for more information.
  • Eligible loans are borrower specific; students cannot include a Parent PLUS Loan in their Direct Consolidation Loan.
  • Alternative (private) loans are not eligible for a Direct Consolidation Loan.

Interest rate

The interest rate for a Direct Consolidation Loan is based on the weighted average of the loans that are consolidated rounded up to 1/8 of a percent.

There is no cap on the interest rate of a Direct Consolidation Loan. Borrowers who have variable rate direct loans and PLUS loans may wish to wait until the new variable interest rates are announced to evaluate whether to consolidate loans before or after the new variable rates are effective.

Application process

Application information is available at

  • You must sign and complete a promissory note to complete your application.
  • The Direct Consolidation Loan disburses approximately 60–90 days after the application is completed.
  • The Direct Consolidation Loan online application will incorporate your cumulative loan records. The application and your loan records can be found at
  • Federal Nursing student loans are eligible to be included in a Direct Consolidation Loan, but are not included in NSLDS and must be added to be included.

Continue to make payments on your loans or you may request a period of forbearance (a period of time in which your monthly payments are reduced or stopped) until you are notified that the disbursement of your Direct Consolidation Loan has been completed.

Perkins Loan considerations

The Perkins Loan forgiveness (cancellation) options are not available for the Perkins Loan amount included in a consolidation loan.

If you anticipate eligibility for Perkins Loan forgiveness (cancellation) you may withhold the loan(s) from consolidation. In the future, if you don’t qualify for forgiveness on the loan, or still have a balance remaining after maximum forgiveness has been received, you can consolidate the loan and the existing Direct Consolidation Loan.

Perkins Loans are unsubsidized portions of a Direct Consolidation Loan; the interest subsidy of an unconsolidated Perkins Loan is not retained.

Private consolidation loans

Some lenders offer private consolidation loans, varying from lender to lender. If you wish to pursue a private consolidation loan, be sure to fully understand the calculation of interest, terms, and borrower benefits.

Additional information regarding private consolidation loans is available from and from the lender offering you a private loan consolidation product.