Student Loan Consolidation Overview

Student loan consolidation is a way for borrowers to refinance their student loans, much like a mortgage. Borrowers with one or more loans can combine their loans into one lower, monthly payment. Student loan consolidation is a great option for those who are looking to simplify repayment, lower their monthly payment, or even lower their alternative loan interest rates.

Student loan consolidation is available for both federal and private loans, though these two types cannot be consolidated together. For federal loans, borrowers can consolidate through the Direct Consolidation Loan Program. Alternative student loans should be consolidated directly through a private lender.

Consolidation Benefits

Simplified Finances

For borrowers with multiple loans, consolidation is a great way to combine payments into one, easy-to-mange loan.

Lower Monthly Payments

Consolidation not only combines loans, but it also extends the term of the loan. This means, that instead of repaying, say, $30,000 over ten years, borrowers could pay the same amount over 25.

Lower Interest Rate

Alternative loan borrowers with high interest rates are good candidates for student loan consolidation. Borrowers are most likely to get a better rate if their credit has improved or if they apply with a cosigner.

Other Benefits

Most alternative consolidation loans come with borrower benefits. From relationship discounts for current customers, to auto-debit discounts, there are a variety of ways borrowers can save money on their loan. To learn what discounts may be available to you, visit

Federal Student
Loan Consolidation
Private Student
Loan Consolidation
Reduces current monthly payment by up to half Checkmark Checkmark
No prepayment penalties Checkmark Checkmark
Interest only payments available Checkmark Checkmark
Simplify finances Checkmark Checkmark
Improves your credit rating Checkmark Checkmark
Fixed interest rate Checkmark
Lender-specific Benefits and Incentives Checkmark
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Consolidation Tips

The best time to consolidate student loans is right before repayment is scheduled to begin. Consolidation will eliminate any remaining grace period on the current loans, so students should hold off consolidating until the end of that time. Once loans are consolidated, repayment begins immediately.

Loans that are consolidated cannot be removed. The borrower will pay the single consolidated loan for the remainder of the payment period and cannot revert to paying the loan's original lender.