Student Loan Consolidation

While you are achieving your degree, you may take out numerous loans to help pay for school. When you graduate, you might want to consider consolidating your loans into a single loan with just one payment each month.

Determine if consolidation is right for you by considering your current loan terms and repayment status. If you consolidate during your grace period, you can lock in an interest rate at least a half percent lower than the current repayment rate. But consolidation may impact deferment options, cancellation options, and other borrower benefits such as interest rate discounts or principal rebates, which can significantly reduce the cost of repaying your loans. You may even lose cancellation and deferment benefits depending on the types of loans you consolidate.

The interest rate for FFEL and Direct Consolidation Loans is set according to a formula established by federal statute. The consolidation rate is fixed for the life of the loan, which protects you from future increases in variable rate loans but prevents you from benefiting from future decreases in variable rates.

The interest rate you would receive, however, depends on which federal student loans are being consolidated. For example, your rate would be higher if you consolidated a 5 percent Federal Perkins Loan along with a 6.62 percent Direct or FFEL Stafford Loan.

What Loans Are Eligible for Consolidation?

  • Subsidized Federal Stafford Loans
  • Unsubsidized Federal Stafford Loans
  • Federal PLUS Loans*
  • All Federal Direct Student Loans
  • Federally Insured Student Loans (FISL)
  • Federal Consolidation Loans (if you have an additional loan that is eligible for consolidation)
  • Perkins Loans [formerly National Defense/Direct Student Loans (NDSL)].
  • Federal Supplemental Loans for Students (SLS)
  • Health Education Assistance Loans (HEAL)
  • Federal Nursing Student Loans (NSL)

Private consolidation loans are not eligible for consolidation.

*Federal PLUS Loans taken out on a dependent's behalf can be consolidated with the existing eligible student loans of that parent. Federal PLUS Loans cannot be consolidated with the dependent's student loans.

Speak to your lender regarding loan consolidation as an option for repaying your student loans.

To learn more about loan consolidation, explore Direct Consolidation Loans.

Repayment Plans

How much you pay and how long you take to repay your loans will vary depending on the repayment plan you choose. There are several repayment plans available:

  • Standard — you pay a fixed amount each month until your loans are paid in full. Your monthly payments will be at least $50, and you'll have up to 10 years to repay your loans.
  • Extended — you pay a fixed annual or graduated repayment amount over a period not to exceed 25 years. Your fixed monthly payment is lower than it would be under the Standard Plan, but you'll ultimately pay more for your loan because of the interest that accumulates during the longer repayment period.
  • Graduated — your payments start out low and increase every two years. The length of your repayment period will be up to ten years. If you expect your income to increase steadily over time, this plan may be right for you.
  • Income Based Repayment (IBR) — Effective July 1, 2009, the required monthly payment is capped at an amount that is intended to be affordable based on income and family size. You are eligible for IBR if the monthly repayment amount under IBR will be less than the monthly amount calculated under a 10-year standard repayment plan. If you repay under the IBR plan for 25 years and meet other requirements you may have any remaining balance of your loan(s) cancelled. Additionally, if you work in public service and have reduced loan payments through IBR, the remaining balance after ten years in a public service job could be cancelled.
  • Income Contingent Repayment (ICR) (available to borrowers with Direct Loans) — each year, your monthly payments will be calculated on the basis of your adjusted gross income (AGI, plus your spouse's income if you're married), family size, and the total amount of your Direct Loans. The maximum repayment period is 25 years. If you haven't fully repaid your loans after 25 years (time spent in deferment or forbearance does not count) under this plan, the unpaid portion will be discharged. You may, however, have to pay taxes on the amount that is discharged.
  • Income-Sensitive Repayment (available to borrowers with FFEL Loans) — your monthly loan payment is based on your annual income. As your income increases or decreases, so do your payments. The maximum repayment period is 10 years.

The Department of Education’s Student Aid site has lots of helpful information on loan repayments, including links to repayment calculators.