A Direct Consolidation Loan may help make payments more manageable by combining several federal student loans into one loan with one monthly payment. You may apply for a Direct Consolidation Loan offered by the U.S. Department of Education and choose a servicer, like Edfinancial Services, and a repayment plan, such as an Income-Driven Repayment (IDR) Plan.
Note
There is no application fee to consolidate your federal education loans into a Direct Consolidation Loan.
You may be contacted by private companies that offer to help you apply for a Direct Consolidation Loan, for a fee. These companies have no affiliation with the U.S. Department of Education (ED) or ED’s consolidation loan servicers. There’s no need to pay anyone for assistance in getting a Direct Consolidation Loan.
How can consolidation help you manage your debt?
Loan consolidation can offer benefits that may help you manage your federal student loan debt. Consolidation allows you to:
- Make lower monthly payments by increasing the repayment period (Note: This will increase the total amount you repay over the life of the loan).
- Make a single monthly loan payment to one company.
- Access additional loan forgiveness programs and repayment plans available to Direct Loan customers.
- Gain eligibility for the Public Service Loan Forgiveness (PSLF) Program if you meet additional program requirements. Before you consolidate, we recommend you evaluate how the qualifying payments made on the loans that would be included in your consolidation loan will be credited to your consolidation loan. Visit the “Eligible Loans” section at StudentAid.gov/publicservice for more information.
As with other federal student loans, you may prepay a consolidation loan without penalty and may change repayment plans if you find that the current plan no longer meets your needs.
Is there a downside to consolidation?
Although consolidation can help many students manage their monthly payments, there are some cases when consolidation may not be right for you.
- When you consolidate your loans, any outstanding interest on the loans becomes part of the original balance on your consolidation loan, which means that interest may accrue on a higher principal balance.
- You may lose certain benefits (such as cancellation benefits, interest subsidies, etc.) that were offered on the original loans. If you are close to paying off your student loans, it may not make sense to consolidate. By extending the years of repayment for the loans, you may be increasing the total amount you will have to pay in interest.
| Pros | Cons |
|---|---|
| Lower monthly payments | Longer repayment schedule: Consolidation may extend how long you have to pay off student loans, sometimes up to 30 years. |
| Fixed interest rate | More interest to pay: You may pay more interest since you’ll be making payments for a longer period of time. Plus, the new interest rate is based on the weighted average of the underlying loans, rounded to the nearest higher 1/8th of one percent. |
| Convenience of one bill with one payment | Loss of loan incentives: When you combine multiple loans into one, you may lose any incentive programs on the original individual loans. |
Do your homework. If you simply need a smaller payment or if you’re experiencing a temporary financial hardship, you may want to consider changing your repayment plan before considering consolidation.
Loan consolidation provides access to additional options but may result in the loss of certain benefits so we encourage you to visit studentaid.gov/manage-loans/consolidation to learn about the pros and cons of consolidating your loans.
Helpful Tips
- Not all loans qualify for loan consolidation, so check to see if this is an option for you.
- Once you consolidate, you can re-consolidate only if you have an eligible student loan that was not included in the original consolidation.
- If you are looking for a smaller payment option or experiencing financial hardship, there are several options available. Please visit our Lower Payment Options page for more info.
How to Apply
Skip the paperwork and have your request processed faster by completing it online at StudentAid.gov. This is the quickest and easiest way to submit your request. You will need your FSA ID, personal information, and spousal information (if applicable).
If you are unable to complete the online request, you can get a copy of the paper request form at StudentAid.gov/Forms-Library.
Before you complete your application, you can estimate what your monthly payments will be under each of the available repayment plans using the Loan Simulator on StudentAid.gov.
Loan Simulator Apply OnlineNote
You must continue making payments until you receive notice from your servicer that the original loans included in your consolidation request have been paid off due to the consolidation.