Consolidating Loans

General Information

A consolidation loan allows you (or your parents, if they have a PLUS Loan) to combine several types of federal student loans with various repayment schedules into one loan with one monthly repayment. Your payments might be significantly lower than under the 10-year Standard Repayment Plan, and you might receive a lower interest rate than you are currently paying on one or more of your loans. There are Direct and Federal Family Education Loan (FFEL) Consolidation Loans.

Federal Direct Loans and Federal Direct PLUS Loans, as well as Federal Perkins Loans, are eligible for consolidation, and others can be included. However, under current regulatory legislation, in-school status loans cannot be included in a consolidation loan. For a Direct Consolidation Loan, contact the Loan Origination Center’s Consolidation Department at 1-800-557-7392. TTY users, call 1-800-557-7395. Borrowers may also go to the comprehensive Federal Direct Consolidation Loan site.

How Do I Know if Consolidation Will help Me?

You will be given more information about consolidation loans during required entrance and exit counseling sessions.

As a general rule, once made, consolidation loans cannot be reversed because the loans that were consolidated have been paid off and no longer exist. Take time to study your consolidation options carefully before you apply, and talk to the holder of your loans for more information before you consolidate.

Please note: Borrowers with prior loans in the FFEL Loan Program will be able to switch to the Direct Loan program if they want to take advantage of the Public Service Loan Forgiveness Income Based Repayment (IBR) Plan. Information about IBR is available at IBRInfo(opens in new window), an independent, nonprofit source of information about new federal student loan payment and forgiveness programs.

How Does Default Affect Consolidation?

If you are in default on a federal student loan, you still might be able to consolidate, provided the defaulted loan is not subject to a judgment or wage garnishment.