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What is Consolidation?

Loan consolidation allows eligible borrowers to combine loans obtained from more than one lender and or several programs into one new loan. Loans eligible for consolidation must be either in grace or repayment. Defaulted loans can be considered if satisfactory repayment arrangements have been made with the lender or grantor.

Pros and Cons of Consolidation

Many things should be considered before making a decision to consolidate your loans. The following information will help you assess the pros and cons of consolidation:


  • Your payments are centralized-you make only one payment to one lender
  • Depending upon how much you owe, you could receive anywhere from 10 to 30 years to repay a consolidation loan
  • Your lender must offer you a standard, graduated, income-sensitive, or extended repayment schedule
  • The federal government pays the interest on the underlying subsidized Stafford Loans included in your consolidation loan during authorized periods of deferment
  • You may be able to lock in low fixed interest rate and avoid the possibility of variable interest rates going up in the future


  • Although you may receive a low fixed rate on a Consolidation loan now, you will be locked in to that rate even if the variable interest rates on student loans go even lower in the future
  • As previously stated, your repayment terms could be extended. This means you could pay substantially more in interest on your loan
  • You could lose your eligibility for certain types of deferment. This means that you may have to make payments on your consolidation Loan when you wouldn't have had to under the terms of your original promissory note.

Loan consolidation is not for everyone. Before consolidating, you should consider if the immediate benefit of lower monthly payments justifies a longer payment period. Borrowers should also realize that private/institutional loans can NOT be consolidated with their federal loans.

Review the Loans at a Glance FAQ sheet to see details regarding consolidation eligibility for your loan.

Loans Eligible for Consolidation