Federal Loan Consolidation

Before You Consolidate, Know Your Federal Loan Debt

To access all of your federal student loan history login with your FSA ID at: NSLDS.ed.gov . This history will not include any private educational loans. Compare your current federal loan interest rates, deferment options and repayment incentives with those of a Federal Direct Consolidation loan to see if consolidation is the best option for you at: studentloans.gov. The Department of Education provides free loan counseling. Student borrowers should never pay a fee for these services.

Federal Direct Loan Consolidation

Federal Direct loan consolidation allows you to combine your eligible outstanding federal student loans into one loan with one monthly payment. Your consolidated loan will have a fixed interest rate that is set at the weighted average of the interest rates of the underlying loans. Keep in mind that you cannot consolidate private educational loans with your federal loans. However, any federal education loan can be consolidated.

Federal Direct Loan Consolidation Benefits

  • Income Based Repayment (IBR) Plan is only offered through Direct Lending Program
  • Borrowers who will work full time in public service, may be able to benefit from the Public Service Loan Forgiveness Program, only offered through Direct Lending.
  • Consolidation can allow for borrowers to enter repayment plans that offer extended repayment periods to help lower monthly payments.
  • Consolidation allows borrowers to combine all their federal loans and pay one lender and have one monthly payment.

Federal Direct Loan Consolidation Disadvantages

  • Consolidated Federal Parent PLUS Loans do not qualify for Income Based Repayment Plan or Public Service Loan Forgiveness.
  • If the loans the borrower consolidates are repaid over a longer term, the amount of interest will be greater.
  • The interest rate reductions and other benefits offered with the borrowers original Federal Stafford and/or Plus Loan may not be as favorable.