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How to Consolidate Your Student Loans

Students and parents can simplify their repayments of government loans by combining one or more loans into a consolidated loan.

Although it may sound strange that you can “consolidate” just one loan, this is an actual option in which you can switch from one repayment plan to a more flexible repayment schedule. Consolidation loans are a good strategy, since it is easier to keep track of one payment per month, and because you can often get a lower interest rate. Another benefit is that sometimes you can get a consolidated loan even when you are have defaulted on another loan.

Most types of Stafford and PLUS Loans can be consolidated under this program. For more information on which loans you can consolidate, contact the Loan Origination Center’s Consolidation Department at (800) 557-7392. A TDD number is also available: (800) 557-7395.

Key Characteristics

  • Consolidated Loans must be repaid
  • Lender: participating private lenders and the Department of Education
  • Insurance: insured by the federal government, or through a private lender with the backing of the government
  • Interest rate: for direct loans, the interest rate is variable, but it cannot exceed 8.25 percent for the consolidation of a Stafford loan, or 9 percent for a PLUS loan; FFELP Consolidated Loans have an interest rate that is the average of the rate of the loans being consolidated rounded to the nearest eighth of a point, with a cap of 8.25 percent.
  • Deadlines: you can apply for these loans during grace periods, after you have begun repaying your loans, or during for-bearance or deferment of a loan.

How Do I Determine My Eligibility?

Anyone who is in need of consolidating a federally backed student loan can apply for a consolidated loan, but there are some restrictions, depending on the type of loan. To receive a Direct Consolidated Loan, you must have at least

one loan that comes directly from the federal government; if you do not have any direct loans, you will then need to contact an FFEL lender. You will probably want to start by contacting the lender from whom you originally borrowed to find out about their FFEL Consolidation loan program.

You can receive a Direct Consolidated Loan after you have begun repayment of a loan, or during a grace or forbearance period. If you are still attending school, you must be registered as at least a half-time student. If your school does not participate in the Direct Loan program,
you must at least have one Direct Loan to repay.

How Much Can I Get?

The amount of the loan is equal to the total amount of the loans being consolidated.

Getting Started

The best way to find out about Consolidation Loans is to either talk to your school’s financial aid office, or to contact the Loan Origination Center’s Consolidation Department at (800) 557-7392 for direct loans, or the consolidation department of the private lender you borrowed from if you have an FFEL Consolidation Loan.


After contacting the Loan Origination Center, you will receive an application form in the mail. Approval of the loan generally takes 90 days after the return of this form. The Loan Origination Center will check your eligibility (and do a credit history if you apply for a Direct PLUS Consolidation Loan) and certify that you have a loan with the original lender. You will then receive a letter in the mail welcoming you to the program and outlining the repayment terms, which will differ from student to student depending on the types and amounts of loans being consolidated and the current interest rates, which are updated quarterly.

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