Student Financial Services
Student Financial Services

Financial Aid: Loans

Managing Your Loans
Prior to Repayment
During Repayment
Loan Consolidation
Loan Resources


You can combine all of your federal student loans into a single new loan with a Direct Consolidation Loan.  The loans included in the consolidation loan will be paid when the consolidation loan disburses.  You will receive a new repayment schedule based on the amount of your consolidation loan, the loan interest rate and the repayment plan chosen.  Standard, graduated, extended, income-contingent and income-based repayment plans are available.  Consolidation loans provide deferment and forbearance options.
Loan consolidation is an individual decision that requires careful consideration and research because it has long-term implications. Consolidation may be a helpful strategy for successful repayment if you

  • need to reduce your total monthly loan payments
  • have multiple loan servicers
  • have loans with variable interest rates 
  • wish to make FFEL, Perkins and Nursing loans eligible for Public Service Loan Forgiveness.

The following information will help you make an informed decision about loan consolidation:

Potential Reduction of the Minimum Monthly Payment
Potential Increase in Total Interest Paid
Interest Rate
Application Process
Perkins Loan Considerations
Consolidation Example
Private Loan Consolidation


Potential Reduction of the Minimum Monthly Payment
The minimum monthly payment amount is typically lower than the total minimum monthly payments of loans that are not consolidated because the repayment term on the consolidation loan is often extended. Since you may be going from a 10-year repayment period to a 12, 15, 20, or even a 30 year repayment period, you can anticipate a reduction in your minimum monthly payment.  See example.

Back to top


Potential Increase in Total Interest Paid
A consolidation loan may have a repayment term beyond ten years depending upon the total amount of the loan.  You may pay more in interest for your loan if you only make the minimum monthly payment.  You may pay more than the minimum monthly payment to pay off your loan more quickly and reduce the total amount of interest over the life of your loan. Consolidation loan calculators (Available from Direct Consolidation Loans and Mapping your Future) will help you to estimate the minimum monthly payment and identify the repayment term for a consolidation loan.   See example.

Back to top


To qualify for a Direct Consolidation Loan , borrowers must have at least one Direct Loan or Federal Family Education Loan (FFEL) that is in grace, repayment, deferment or default status. Loans that are in an in-school status cannot be included in a Direct Consolidation Loan.

  • Borrowers who do not have Direct Loans may be eligible for a Direct Consolidation Loan if they include at least one FFEL Loan and have been unable to obtain a Federal Consolidation Loan with a FFEL consolidation lender or have been unable to obtain a Federal Consolidation Loan with income-sensitive repayment terms acceptable to them or intend to apply for loan forgiveness under the Public Service Loan Forgiveness Program.
  • Borrowers who have only a Direct Consolidation Loan cannot consolidate again unless they include an additional eligible loan.
  • Federal Nursing Student loans are eligible to be included in a Direct Consolidation Loan.
  • Borrowers who are delinquent or in default may have certain requirements to meet before they may consolidate their loans. Contact your loan holder for more information.
  • Eligible loans are borrower specific; students cannot include a parent PLUS loan in their Direct Consolidation loan.
  • Alternative (private) loans are not eligible for a Direct Consolidation loan.

Back to top

The interest rate on a Direct Consolidation loan is based on the weighted average of the loans that are consolidated rounded up to 1/8 of a percent. Your interest rate can never exceed 8.25 percent. Borrowers who have variable rate Stafford and PLUS loans may wish to wait until the new variable interest rates are announced to evaluate whether to consolidate their loans before or after the new variable rates are effective.  See example.

  • Stafford and PLUS loan interest rate information is available at Student Aid on the Web and from your loan servicer(s).
  • Perkins, Nursing and SPU Institutional loans have a fixed interest rate of 5%.

Back to top


Application information is available at; a promissory note must be completed and signed to complete your application.  The consolidation loan disburses approximately 60-90 days after the application is received by Direct Consolidation. Using the online Web application can reduce the amount of time it takes to complete the consolidation of your loan(s).

You will need to have information about each of the eligible loans that you wish to include in a Direct Consolidation loan.  Information about Stafford, PLUS and Perkins loans is available from your loan servicer(s) and in your cumulative records maintained in the National Student Loan Data System (NSLDS).  Federal Nursing student loans are not included in this database but are eligible to be included in a Direct Consolidation Loan.

Continue to make payments on your loans or you may request a period of forbearance until you are notified that the disbursement of your Direct Consolidation Loan has been completed. 

Back to top


The Perkins loan forgiveness (cancellation) options are not available for the Perkins loan amount included in a consolidation loan. If you anticipate eligibility for Perkins loan forgiveness (cancellation) you may withhold the loan(s) from consolidation. In the future, if you don't qualify for forgiveness on the loan, or still have a balance remaining after maximum forgiveness has been received, you can consolidate the loan and the existing federal consolidation loan.

Perkins loans are unsubsidized portions of a consolidation loan; the interest subsidy of an unconsolidated Perkins loan is not retained.

Back to top



Individual Repayment Estimates (1)

Loan Amount

Interest Rate

Monthly Payment

Repayment Term

Interest Paid

Total Paid

Subsidized Stafford




4.4 yrs



Subsidized Stafford




6.4 yrs



Subsidized Stafford




9.6 yrs



Unsubsidized Stafford




10 yrs







7.2 yrs



Total Unconsolidated





Direct Lending Consolidation (2)

Standard Repayment




15 yrs






104.96 (3)

15 yrs



  1. Source: Loan Consolidation Calculator 
  2. Source: Direct Consolidation Loan calculator
  3. This is an estimated monthly payment amount for the first two years of the term. The monthly payment amount generally will increase every two years, based on a gradation factor.

Back to top


A calculator can help you evaluate the effect of consolidation for your loans.  Many online calculators other than those listed below are available.

Back to top


Some lenders offer private consolidation loans. These private consolidation loans vary from lender to lender. If you wish to pursue a private consolidation loan, be sure that you fully understand the calculation of interest, terms, and borrower benefits.   Additional information regarding private consolidation loans is available from FinAid and from the lender offering a private loan consolidation product.

Back to top

Last Updated: 5/3/2012