Federal Consolidation Loan

A Federal Consolidation Loan is a loan program that allows you to combine all of your previous Federal loans into one loan.

The consolidation loan pays off loan balances of all loans you want consolidated. This creates a new loan with a new repayment schedule. There are no credit checks or fees for the consolidation loan. It takes about six to eight weeks to receive payoff information from your lenders, review your application for completeness, and disburse your Federal Consolidation Loan to your lenders.


You can consolidate if you:

  • Have fully disbursed federal education loans, such as Stafford, Direct, or Perkins loans
  • Have graduated, left school, or are enrolled less than half-time
  • Have met minimum balance requirements (set by each lender)

Currently enrolled students are not eligible to consolidate their loans.

Benefits of Consolidation

  • Lower payments over a longer period of time
  • Locking in a fixed interest rate
  • One lender with only one monthly payment
  • No penalty for early repayment

Drawbacks of Consolidation

  • You may lose your grace period
  • You may lose repayment benefits
  • Longer repayment term means more interest paid over time
  • You may lose loan forgiveness benefits
  • You cannot reconsolidate if interest rates decrease


  • Apply for the Federal Consolidation Loan during your grace period to keep your in-school interest rate.
  • Even if you receive an extended loan repayment period and a locked-in low-interest rate, continue to make the same monthly payment as before consolidation. This step allows you to pay off your loan more quickly and save even on the amount of interest you pay on the loan.
  • Some consolidation lenders offer you the opportunity to consolidate your credit card debt and/or alternative loans along with your federal loans. These types of consolidation loans are private loans that generally do not have the same benefits as the Federal Consolidation Loan. If you consolidate other types of loans or debts with your student loans, you risk raising substantially the overall interest on the loan.