How do I Consolidate my Student Loans?

To consolidate your student loans, you go through an application process that combines all your smaller loans into one and gives you a single-payer and lender. As you come to the end of your college years, you may find yourself with some debt to pay off, like 44 million other American graduates.

Under certain circumstances, it makes sense to consolidate your loans into one. This process often gives you more repayment options, simplifies the structure of your debt, and gets you a better interest rate. Here are some things to consider and a step-by-step guide on how to do it.

Is Student Loan Consolidation for Me?

Consolidating your student loans means you take all your different loans and combine them into one loan with one lender. Usually, the term applies to federal student loans, though ways to consolidate or refinance private loans exist as well. There are many benefits to consolidation, but there are a few negatives as well, so you should research carefully to see if it makes sense for your situation.


  • Gives you one monthly bill payable to one lender
  • Can lower your payments and give you more time to repay
  • May give you access to other repayment options based on income
  • Gives you a fixed interest rate as opposed to a variable one


  • May result in paying more in interest
  • Loss of any benefits associated with the original loan
  • Can lose credit for payments already made under some plans

Yes, I Want to Consolidate

When you’ve carefully considered all the factors and decided that consolidation of your federal loans is the right move, follow these five steps to complete the process.

  1. Go to, log in, and complete the Direct Consolidation Loan Application. This is a free process. There are companies that charge you to do it for you, but that’s wasted money. You can easily do it yourself in less than half an hour. Detailed instructions are right there on the website to walk you through step by step.
  2. Select the loans that you want to consolidate. You don’t have to include all your loans, and in fact, it may not make sense to consolidate them all. Make sure you look at each one carefully and decide whether you should bundle it. Some loans, like Perkins for example, have benefits attached that you lose if you consolidate.
  3. Choose your loan servicer from the four available choices: FedLoan Servicing, Great Lakes Educational Loan Services Inc., Navient, and Nelnet. If you already have a loan with one of them, you can choose to continue to work with that lender or pick another one.
  4. Pick your repayment plan. You have several options, so use the repayment estimator tool to see how your payments look under different scenarios. A standard repayment plan has equal monthly payments over a period of 10 to 30 years. Six other non-standard plans exist too, including four income-based schedules. Those are a good choice if you’re in a field like teaching or social work that offers a forgiveness program for working in an underserved area.
  5. Fill in a few more pieces of information, sign, and then submit the application. Do one last review of your situation to be sure that consolidation is for you. This is very important because you can’t undo it once it’s done. Remember that you must keep making payments on your old loans until you get confirmation that your consolidation is complete and you receive new payment instructions.

Private Loan Consolidation

Keep in mind that the steps above only apply to federally administered student loans. The consolidation of private student loans is more accurately called refinancing. While it accomplishes the goal of getting one payment with one lender, you probably won’t get a rate as low as that of federal loans.

Like most other consumer loans, the rate you get is based on your credit score, and if you’re a new graduate just starting out, yours might not be that great. Evaluate all the factors carefully, and you may find that it’s better to wait until you’ve been on the job a while and have established longer credit history.

Managing student loans responsibly is one of the first adult financial decisions many young people make. If you do your homework and look at all the possibilities, you can find a plan that fits into your financial plan for the future. All things considered, most students find that consolidation of federal loans makes sense.