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How to Consolidate Student Loans


Loan consolidation may sound attractive for many students. Indeed, why not lumping all your debts together and stop bothering about several types of monthly payments? However, there are a couple of things you should know before you make a decision. In fact, loan consolidation won't be a good option in each and every case. If you decided to consolidate your student loans, you need to know a lot of information about the process of consolidation. If you want to know more, please read on.


What type of loans you have?

First of all, not all types of loans can be consolidated. Check with your loan issuer to get information about consolidation options. Usually, all types of federal student loans are eligible for consolidation. Particularly, you can apply for consolidation if you have direct/indirect subsidized loans, subsidized and unsubsidized federal Stafford loans, PLUS loans, SLS, Nursing, loans, Perkins loans, and health education assistance loans.

Interest rate issue

This operation would change your interest rate and you can find yourself paying more in the long run. However, if you did your homework and found out all pros and cons and still want to consolidate your student loans, you should know which way to go. Usually, they calculate your new interest rate according to the average rates, but remember that they round them up.

How do these companies work?

There are several different companies that offer student loan consolidation. Basically, what they do is buy all your loans from your original loan issuers. After that, they either offer you a period of deferment that allows you to delay your monthly payments, or a lower interest rate.

Are you eligible?

You need to meet certain requirements to apply for consolidation. Particularly, you should have at least 1 direct or FFEL program loan that is in a grace period/in repayment.


After that, you can go to the official Direct Consolidation Loan website and fill in the application. You can also call them or ask them to send a copy of application if you don't have Internet access. Once your application is approved, they will contact you and let you know the details. The good news is they don't charge you with any fees for this application, so you can re-consolidate your loans as often as you can.

There are several repayment plans that they can offer you depending on your situation. All you need to do is share the details of your situation with the agent and get the best repayment plan.


  • You are not eligible for consolidation if you are in default unless you meet some certain requirements.
  • You are also not eligible for consolidation if your loans are private.
  • You can't re-consolidate a consolidated loan. To do that, you're going to get another direct loan or FFEL program loan.
  • Do not opt for consolidation without a proper research. Compare your current situation and your monthly payments with the prospective interest rates and only apply if it seems reasonable.



Consolidated loan is easier to pay off because you don't have to bother about a bunch of different federal loans. It's really much handier to have them all combined, especially if the interest rate is lower than your previous rates for multiple debts. Many students find consolidation a very convenient way to pay off their debts on more beneficial terms. Consult with professionals before you apply for consolidation!

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