Student Loan Consolidation

When people have more than one student loan, they have the option of obtaining a student loan consolidation.

When they do this, they are taking out a new loan which pays their current student loans in full. The consolidation loan makes paying back student loans much easier for those who have several Federal loans that are all due at different times each month or are due to several different lenders.

The result of consolidating loans will, most likely, be lower interest rates. With lower payments, these former students are in less danger of defaulting on their payments. It also increases the length of the loan which further helps to decrease the amount to be paid.

Benefits of Consolidating Student Loans

The Payments Are Too High

Those who can't easily pay their loans and can no longer ask for a forbearance or a deferment will benefit from consolidating their loans. It's possible that student loan consolidation would lower the interest charged every month resulting in lower monthly payments. It would also add convenience because they wouldn't be paying more than one lender every month; they would write one check to one lender at a lower amount than they are paying their current lenders combined.

The Interest Rate Is Variable

With a variable interest rate, the payments may increase or decrease each month. A student loan consolidation can give these people a more predictable payment each month with a fixed rate of interest.


Those eligible for consolidating their loans can't currently be in school at the time they submit their applications. They may either be up to date with their payments or they may have defaulted already; people are also allowed to apply if they are in a deferment period.

The loans that can qualify are the William D. Ford Federal Direct Loan Program, Direct Loan Program for short. These include:
  • Direct subsidized loans

  • Direct unsubsidized loans

  • Direct PLUS loans

  • Direct consolidation loans

The other types of loans that qualify are the Federal Family Education Loan Program (FFEL) loans:
  • Subsidized Federal Stafford loans

  • Unsubsidized Federal Stafford loans

  • Federal PLUS loans

  • Subsidized Federal Consolidation loans

  • Unsubsidized Federal Consolidation loans

Who Wouldn't Benefit from Consolidating

Not everyone would benefit from consolidating their loans. Those who wouldn't are people who are very close to paying their loans off in full. The consolidation loan increases the length of the loan and if these people can manage their payments until their original loans are paid, they would be better off to continue in that direction. Also, increasing the term of a loan means that people will be paying even more over the length of the loan.

Consolidating student loans will help those who are in danger of defaulting to avoid this unfortunate circumstance from occurring. The results of a default can be any number of unpleasant things including having their wages garnished to repay these loans. People in this situation would be doing themselves a big favor in determining if they can qualify for a student loan consolidation.

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