How to Consolidate Student Loans: Federal and Private

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Edited byAmy Wilder

Updated: August 31, 2023

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Student loan consolidation is a strategy borrowers use to make debt repayment more manageable. It allows you to lump multiple student loans into one loan, leaving you with a single monthly payment to one lender.

There are two types of student loans — federal and private. These determine what method of consolidation you can use.

Student loan consolidation through the Department of Education’s Direct Consolidation Loan replaces old federal loans with a new type with no origination fee. You cannot include any private student loans in this option.

A similar method, called refinancing, is used for private student loans. You take out a new loan from a private lender to cover all existing student loans to end up with a single loan. You can include federal loans in a private refinance loan, but it may not be your best option for interest rates and repayment terms.


Private Student Loan Consolidation

There are two options for borrowers who want to combine multiple student loans — consolidation and refinancing.

Although these terms are often used interchangeably, they refer to different methods. Consolidation is technically only applicable to federal student loans. Private student loan consolidation, on the other hand, is more commonly referred to as refinancing.

Lenders have different qualification requirements. Typically, these include a minimum credit score, your credit history, income, debt-to-income (DTI) ratio and payment history for the loan(s) you are refinancing.

Refinancing is different from consolidation in that you:

  • can combine multiple student loans, federal or private
  • take out a new loan to pay off current debts
  • apply through a private lender
  • may find lower interest rates and monthly payments
  • cannot access federal benefits and protections

Student loan refinancing is taking out a new loan to replace an existing one. You can use refinancing to merge multiple loans by paying off existing student loans, including federal and private. It’s potentially a way to combine loans or find better terms. It’s important to note that refinancing federal student loans will lead to the loss of federal benefits like loan forgiveness programs. Make sure you weigh the pros and cons of refinancing before applying.

How to Consolidate Private Student Loans

First you should determine whether refinancing is the right option for you. Review the loan terms and rates of all your existing student loans. This will give you an idea of what to look for in a refinancing offer.


Find a reputable private lender

There are various lenders offering student loan refinancing. Research available terms and any special features or perks they offer. Find out if the lender charges origination fees or offers low interest rates. You can read reviews from previous and current customers to check credibility and service.


Check your qualifications

Eligibility requirements vary per lender. Look into these as well when narrowing down your lender options. Generally, you may need to meet a minimum credit score, DTI and minimum income.


Choose your repayment term

Repayment term plays a role in how much your monthly payment will be. Decide on the term that best fits your financial situation. Some loan providers offer pre-qualification, letting you view possible rates and terms.


Submit requirements and apply

Once you find the right lender and loan option, you can proceed with the application. Applying may include submitting documents such as:

  • government-issued ID
  • transcript or diploma
  • proof of employment
  • proof of residency
  • existing student loan documents

Lenders may also conduct a hard credit inquiry to determine your creditworthiness.

Federal Student Loan Consolidation

If you have multiple federal student loans and are thinking of combining them into a single loan, a Direct Consolidation Loan through the Department of Education may be a good option for you. You can use it to consolidate your debt into one single loan with a new repayment plan. The interest rates will be fixed and based on the weighted average of the interest rates on consolidated loans.
Most federal student loans can be included when consolidating, such as:

  • Auxiliary Loans to Assist Students
  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • Direct Plus Loans
  • Federal Insured Student Loans
  • Federal Perkins Loans
  • Federal Family Education Loan (FFEL) PLUS Loans
  • Guaranteed Student Loans
  • Loans for Disadvantaged Students
  • National Direct Student Loans
  • Parent Loans for Undergraduate Students
  • Subsidized Federal Stafford Loans from the FFEL Program
  • Unsubsidized and Nonsubsidized Federal FFEL Loans

Consolidation is an option for better student debt management. It makes sense if you want to simplify your debt repayment and lower monthly payments while retaining federal loan benefits.

That said, not all borrowers qualify for a Direct Consolidation Loan. You can only be eligible after you leave school, graduate or drop below half-time enrollment. Additionally, your federal student loans should be in repayment or have a grace period.

How to Consolidate Federal Student Loans

You can consolidate federal student loans by getting a Direct Consolidation Loan. You can either complete the process online or mail your application documents. There are no application fees.

  1. Visit and log in to You’ll need your Federal Student Aid (FSA) account ID. Click on Complete Consolidation Application and Promissory Note. Prepare some personal information, including your Social Security Number.
  2. Choose loans you want to consolidate: Determine which federal student loans you want to consolidate. Then, select them in the application form.
  3. Choose a repayment plan: The best repayment plan may vary depending on your situation and needs. Choose the repayment plan that fits your financial situation.
  4. Submit the form online: If you’re 100% sure about student loan consolidation, you can complete the application online. You can also opt to submit by mail by clicking on “Don’t want to use the electronic application?”

Applications for student loan consolidation will go to a loan servicer, which will be in charge of the process. You can contact the servicer for any queries. If you decide to file online, you’ll find contact information at the end of the application process. For mailed applications, the contact information will be available after you download and print the paper application.

Pros and Cons of Consolidating Student Loans

When deciding whether you should consolidate student loans, it’s important to review the pros and cons. Make sure the pros outweigh the cons. Otherwise, you may need to consider other debt management options.

Benefits of Consolidating Student Loans
  • Lower monthly payments: It’s possible to lower your monthly loan repayment bills through consolidation. Direct Consolidation Loans for federal loans allow you to lower your monthly payment with a longer repayment timeline. For private loans, lenders may offer lower interest rates if you have a positive credit history, helping reduce your total costs.
  • Debt management: Having only one loan payment every month makes it easier to manage debt.
  • Longer repayment period: Student loan consolidation or refinancing allows you to reset your payment period. You can decide on the best repayment terms based on your financial situation.
Drawbacks of Consolidating Student Loans
  • Potential for a higher total cost over time: All unpaid interest on current student loans will be added to the principal balance upon consolidation.
  • Possible to pay more interest: Choosing a longer repayment term can lower monthly payments but may increase the total interest you need to pay. Depending on your credit history, private lenders may not also offer lower interest rates.
  • May cause the loss of or reset certain benefits: When you consolidate, you lose any progress made on federal programs like an existing income-driven repayment plan or public service loan forgiveness. If you opt for refinancing, you’ll lose access to federal benefits.

FAQs About Student Loan Consolidation

Federal student loan consolidation won’t have an impact on your credit score. However, private lenders may conduct a hard credit inquiry that can affect your credit if you apply to refinance loans.

You can consolidate federal student loans with a Direct Consolidation Loan through the Department of Education. If you want to consolidate private loans or merge them with federal loans, you’ll need a private refinancing option.

Federal student loan consolidation doesn’t include a credit check. So, it’s possible to get a Direct Consolidation Loan even with bad credit.

Private lenders, on the other hand, check credit scores when evaluating student loan refinancing applications. That said, it’s still possible to find lenders catering to borrowers with bad credit scores. Some may also approve applications if there’s a co-signer.

Yes, it’s possible to consolidate private and federal student loans. Simply apply for refinancing from a private lender. But keep in mind that you may lose access to federal benefits.

It depends. Generally, federal consolidation loans are eligible for loan forgiveness programs, but private loans are not.

The application process for a Direct Consolidation Loan only takes a few minutes, but the actual consolidation may take a few weeks.

If you apply for refinancing, the timeline may vary depending on the lender. Typically, the whole ordeal may also take a few weeks.

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