Consolidating student loans


Managing several monthly federal student loan payments is challenging. Consolidating student loans can simplify the procedure and help you manage your finances.

Consolidation of loans

It implies consolidating many federal student loans into one. You’ll get a fixed rate, a weighted average of your former loans.

Consolidating loans can simplify financial obligations by reducing the number of monthly payments. You can reduce your monthly payment by extending your loan term, but you will pay more in total interest.

Any particular interest becomes part of the new loan’s principal when you refinance your debts. This may result in higher interest rates than if you hadn’t consolidated. Consolidating student loans won’t cut your rate.

A Direct Consolidation Loan application is free. The Department of Education is not linked with private companies that promise to help you finish your application for a fee.

No private loan consolidation (which is sometimes confusingly called personal consolidation). Also, only loans in repayment or grace period can be merged.

How to Consolidate Student Loans?

You must complete the Direct Consolidation Loan application to consolidate your student debts. You can apply online or by mail. You must provide:

  • Verified FSA ID
  • Address, email, and phone number
  • To combine which loans
  • SS#
  • Name and address of employer (or no employer)
  • State and license number
  • Sources
  • How much money do you have? (if you want to combine under an Income-Driven Repayment plan)

How to Consolidate Loans

  1. Examine your loan terms. Examine your loan interest rates and payback terms on your servicer’s portals. Download any necessary files and keep them in case of issues during consolidation.
  2. Apply for a federal Direct Consolidation Loan. The application takes about 30 minutes to complete in one sitting. New loan terms appear when you apply.
  3. Plan your repayments. The default repayment plan sets your monthly payment at a ten-year fixed amount. Gradually increasing payback amounts begin modestly and increase throughout ten-year repayment tenure every two years. You can also choose an Income-Driven Repayment plan that calculates monthly payments based on your income and family size.
  4. Sign an MPN. If you want a new loan, you’ll need to sign a Master Promissory Note. An MPN is a legal commitment to repay a debt, plus interest and costs. Signing this form confirms the loans you want to consolidate.
  5. Keep paying. Hold off your obligations until your Direct Consolidation Loan pays them. After consolidation, you’ll have one monthly payment instead of multiples. Contact your loan servicer if you haven’t received your loan within 60 days.

You need to fill out a federal application and input personal and financial information to consolidate your student debts.


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