Your Questions Answered: Should I Consolidate My Student Loans?

Should I Consolidate My Student Loans

If you’re feeling overwhelmed by your student loans, you can take comfort in the fact that you’re not alone: Over 44 million Americans have student loan debt today.

You might have a mix of both federal and private loans and have several different loan servicers. This can make keeping track of your total debt, minimum payments, and monthly due dates confusing. Sometimes it might even cause you to miss payments.

In cases like this, consolidating your student loans could help you manage your loans more efficiently. But it’s not a one-size-fits-all strategy. Here’s what to keep in mind before you dive into student loan consolidation.

What is student loan consolidation?

If you have multiple federal student loans and want to simplify your payments, consolidating can be a smart strategy. One way to consolidate your debt is to apply for a federal Direct Consolidation Loan.

With this method, the Direct Consolidation Loan is used to pay off your old debts. You’ll get a new loan equal to the combined amount of your old loans. It will have a fixed interest rate based on a weighted average of the loans you consolidate.

By taking out a Direct Consolidation Loan, you can minimize the stress of your debt while retaining your federal loan benefits. Often, Direct Consolidation is required in order to enroll in federal programs such as income-based repayment.

The difference between consolidation and refinancing

While the terms are sometimes used interchangeably, consolidating your loans is different than refinancing them. Because the interest rate is a weighted average, rounded up, consolidation is unlikely to save you money. Consolidation simply makes keeping track of your loans easier since you’ll have just one loan to manage and one payment to make each month.

Refinancing is a completely different process. If you refinance, you can consolidate several loans into one. However, you can refinance both federal and private loans. Plus, refinancing is only available through private lenders, so you lose the federal benefits associated with any federal loans you refinance.

The new, refinanced loan can have completely different terms, too. For instance, you might be able to get a much lower interest rate and shorten your repayment term.

When student loan consolidation makes sense

Although consolidating won’t save you money, it can make repaying your loans easier. Here are three situations when consolidating your student loans might make sense for you:

1. You want to extend your repayment period. If you’re struggling to make your payments under a 10-year, Standard Repayment Plan, consolidation can help reduce your monthly payments. When you take out a Direct Consolidation Loan, you can extend your repayment term to up to 30 years and get a smaller payment.

While extending your payment term can make your payments more manageable, keep in mind you’ll pay more in interest over the length of the loan.

2. You want to qualify for an income-driven repayment plan. If you consolidate loans other than Direct Loans, you can become eligible for income-driven repayment plans. Under these plans, the government extends your repayment term and caps your payments at a percentage of your income. That can help give you more breathing room in your budget.

You’ll pay more in interest over the length of your new repayment term, but an income-driven repayment plan can make keeping up with your payments possible on a small salary. Plus, if you have debt left over when the repayment term is up, it will be forgiven (but taxed as income).

3. You want your loans to have a fixed rate. If you have older federal loans, you may have some with variable interest rates. That means the interest and monthly payment can change according to market conditions. If you want the stability of a fixed-rate loan with steady payments, consolidating can help.

Switching to a fixed-rate loan may give you a slightly higher interest rate, but it will remain the same for the duration of your loan.

When refinancing your student loans makes sense

If your goal is to save money on your student loans, refinancing may be a better option for you than consolidation. Here are some reasons you might consider refinancing instead:

1. You want to lower your interest rate. When you refinance, lenders will offer you different loan terms. Depending on your credit score and income, you may qualify for a loan with a lower interest rate. Lowering your rate can save you a lot of money over time and allow you to pay off your loan faster.

Use our calculator to see if refinancing can save you money.

Student Loan Refinancing Calculator






2. You want to secure a fixed interest rate. If you currently have private loans, you may have a variable interest rate. That means your interest charges could increase over time.

By refinancing, you can get a new loan with a fixed interest rate and guarantee a consistent rate for the life of your loan.

3. You want to reduce your monthly payment. If you’re on a tight budget and your loan payments eat up a big chunk of your salary, refinancing can help.

In addition to getting a lower rate, you can choose a new repayment term. By opting for a longer repayment period, such as 10 to 20 years, you may be able to reduce your minimum payment. That approach can give you more breathing room.

Keep in mind that refinancing has some drawbacks, though. If you have federal loans and refinance them, you will lose out on benefits like access to income-driven repayment plans, deferment and forbearance, and some forgiveness plans. In addition, if you opt to extend your repayment term, you could pay back more in interest over time.

If you want to compare the immediate benefits of consolidating vs. refinancing for your situation, check out the calculator below:

Consolidation vs. Refinancing Calculator

Total interest paid

Monthly payment

Interest rate

Payoff date

Total amount paid
Monthly payment
Interest rate
Payoff date
Consolidating your federal student loans through the Direct Loan Consolidation program would set your new interest rate at , slightly higher than your current rate of . If you chose to remain on the standard repayment plan, you would pay and would finish paying off your loans in . If you refinanced your student loans, with a and 15 year term, you would pay and pay off your loans by .

Refinancing is the only way to lower your interest rate but you may lose some of the safeguards associated with having federal loans, so make sure you are fully educated on the decision by reading our recommended resources below:

Student loan refinancing rates as low as % APR. Check your rate in 2 minutes.

Total amount paid

Monthly payment











Beware of consolidation and refinancing scams

In recent years, many scams have arisen that prey on borrowers struggling to keep up with their payments. For a fee, many companies will offer to consolidate your loans for you. But consolidating your federal loans is completely free, and you can apply online in less than 30 minutes.

If you decide to refinance instead, you can also shop around and compare offers from lenders on your own. You can also complete the application online, without ever paying an application fee.

When it comes to consolidating or refinancing your loans, avoid companies that try to charge you fees to get started.

Should I consolidate my student loans?

The answer to that question depends on several factors, including whether you want to simplify your payments or save money with refinancing.

The most important aspect in making this decision, as with any financial decision, is being aware of all of your options. Weigh the benefits and drawbacks carefully to choose the best path for you and your finances.

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Published in Debt, Direct Loan Consolidation, Federal Student Loan Refinancing, Private Student Loan Consolidation, Private Student Loan Refinancing, Student Loan Consolidation, Student Loan Consolidation Advice

  • Priscilla

    Is there a way I can consolidate my student loan myself instead of going through someone like student debt relief. Also can I consolidate it if Iam in default? Thank you!

    • Hi Pricsilla,

      Yes, you can absolutely do this without paying a company to do it for you. If you sign up for a free Student Loan Hero account, you can current apply to consolidate your loans for free. Sign up here:

      However, if you currently have loans in default, you won’t be able to use this tool. Instead, please see your options for getting out of default and consolidating your loans here:

      Let us know if there’s anything else we can do to help.


      Student Loan Hero

  • A. Elle

    Hi, what about my current loans I have been paying for 12 years… Do student loans work the same way as an auto loan would, in that, interest would have been more heavily weighted at the beginning of my repayment so now all I am really left paying is principle? If this logic is try, it would appear that federal considation would just extend the lifetime of all loans and add a new interest rate to this???

  • Hi,

    Yes, the interest on student loans works similarly to how it works on a car.

    And yes, you’re right. Federal consolidation can lengthen the lifetime of loans and add interest charges (if you end up choosing a repayment plan that extends the repayment term).

    I hope this helps. Let us know if you have other questions.


    Student Loan Hero

  • Sue Benjamin

    I am paying 7.9% On some of My loans. I owe over 180,000. I am on an income based payment plan. I am currently unemployed. Do I have any options at all??? This is so depressing

  • Mike Ikuesan


    I have two questions.

    What are your longest terms to repay the loans?
    Can I consolidate private loans was well with you all?

  • Hi Sue,

    Unfortunately, there’s likely not much else you can do at this point. All the refinancing lenders we work with require borrowers to have a job with steady income.

    Income-based repayment can help and you may be able to get forgiveness down the line. But I don’t think there are any other federal programs that would immediately be of help.

    Sorry there isn’t more I can do. If you have other questions, let me know.



  • Hi Mike,

    The longest term any of our lending partners offer is 20 years.

    Yes, you can consolidate both private and federal student loans with any of our lending partners.

    If you have other questions, let me know!



  • If you are able to consolidation student loan it will be certainly a great way to ease your financial strain — and the stress that goes with it. But this strategy is not a one size fit strategy. It has repercussion to refinancing that should be within your knowledge before you sign on the dotted line.

    Consolidation provides you below mentioned benefits:-

    • Lower interest rate.

    • Change your variable interest rate loan to a fixed-rate loan

    • Lower your monthly payment.

    • You anticipate earning more soon.

    You should be extra careful while choosing company offering debt settlement. Some companies offering these services may engage in deception and fail to deliver on the promises they make. Debt settlement companies take their fees after the settlement of your case. If some company is asking their fees prior to the settlement of your case, then such company is certainly a fictitious company.

  • John Orozco

    Hello I had a question i wanted to ask
    me and my girlfriend make a good amount of money but she has school loans that are federal and private that top out at 50k and we have obviously have our credit card payments and monthly bill payments and car payments we pay in total 1400 together in bills. Are payments are scattered throughout the month and on top of that her loans capitalize 4k at the end of the year so its like were not even paying them so my question is can we consilidate all our payments to 1 payment so that there not scattered throuout the month and to have her school loans not capitilize 4k every year

  • Hi John,

    Thanks for your question. If you’re wondering if it’s possible to refinance and consolidate both private and federal student loans together, yes, it is. However, this can typically only be done with a private lender.

    Doing this will convert any federal loans into private loans. This means that repayment options like income-driven repayment, student loan forgiveness, and federal deferment/forbearance are not long available for these loans.

    The tradeoff is typically a lower interest rate. However, it’s certainly something that requires consideration.

    If there’s anything else I can do to help, let me know!



  • Shun

    Hello ,

    I have a question about a company I just started using a month or so ago and they contacted me to let me know that they work with DOE on consolidating student loans. I needed help because I have multiple loans with different leaders and it was hard for me to keep up with the payments let along how much I officially owed and to whom it was owed to. I think its in the ballpark of around 45-50k. Well to make this long story short The company is called Student Solutions but they have been charging me ($266) a month for 3 months to consolidate my loans. Is this normal for a company that does this to consolidate? When I check the charges it is processed as Strategic Student Solutions 877-404-4835. I also gotten a call recently for another company (I think the name was NAVIENT) explaining to me that if I paid a lump sum amount $2xxx they would eliminate my debt completely from one of my students loans that was around 15k. I know that I have loans with them but I was wondering how he named the exact amount that I had in my savings that I could pay and it would cover the amount I owed.

  • Hi Shun,

    This sounds like a pretty suspicious situation. I do not know that company specifically. However, borrowers do not need to pay companies to have federal student loans consolidated as it’s something all borrowers can do themselves at no charge.

    I also have not heard of servicers like Navient reaching out to borrowers to settle debt that way. I would recommend calling Navient directly at 1-800-722-1300 to inquire about this and find out if it’s legitimate.

    Additionally, you can see all your federal student loans through the NSLDS. You can access the NSLDS here ( or by syncing your loans through the NSLDS with Student Loan Hero (

    Best of luck. If there’s anything else I can do, let me know.



  • Morgan Burkman

    Hi there. I had a question also.
    I currently have 12 federal loans (for each semester I was at school). Six of those loans are subsidized and the other 6 are unsubsidized.. My question is, is it possible to consolidate all of the subsidized loans into one payment and then consolidate all the unsubsidized loans into another payment? Why would I want to pay interest on a loan that currently has no interest 🙂

    Also, I am a teacher and in 5 years I am eligible for the “Teacher Loan Forgiveness”. If I can consolidate my loans into 2 payments, would I be able to use the Teacher Loan Forgiveness on both (just split the forgiveness amount into two) or would I just have to pick one of the consolidated loans for this Loan Forgiveness?

    Thank you!

    • Tiffany Girardi

      I have the same question!

  • Are payments are scattered throughout the month

  • Jack

    This is the biggest f-ing RACKET in the history of mankind and it needs to be stopped!

    • Hi Jack,

      Are you referring to student loans in general? Or something else? If there’s anything I can do to help, let me know!



  • KJ

    I have a few questions:

    In regards to loan consolidation, is it better to select a 20 year repayment plan with the goal of paying off the entire loan in 15 years OR to select a shorter repayment plan (15 years) and stick with paying the required monthly payment?

    For my current private loans (I have 2), I chose a payment plan that did not defer monthly payments while in school. I’m trying to understand a comment made by a friend. Is it true that loan consolidation will negate the monthly payments I’ve been making towards the interest of these loans? Or was my friend referring to the fact that the monthly payments I made while in school will be negated because with loan consolidation, you generate a new interest amount. Which means principal balance will be untouched with your new payments until you pay off the entire estimated interest amount? I thought interest accrued over time. Thus, me deciding to pay more allows me to pay off the loan quicker ultimately decreasing the total amount of interest accrued. Is this not true? My current loan, when paying more than the required monthly payment, only carries over to the next month. It does not deduct from the principal. Instead it deducts the total amount I need to pay for the next month. Is this normal for most companies?

  • LLS

    Is there a way to get out of consolidation once it has been finalized? I consolidated 2012. At the time the job market was horrible for attorneys. I felt like I needed to consolidate to be able to make my payments. As it turns out, I am making more than I anticipated, but the 6.5% on my loan is killing me. I would like to refinance.

    Also, if I only make minimum payments does the unpaid interest get added to the principal? If so, can this negatively reflect on me if I want to purchase a home or get a loan to start a business?

  • RLI

    Can student loan consolidation negatively impact your FICO score

  • RLI

    Can student loan consolidation negatively impact your FICO score