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Should I Consolidate My Federal Student Loans?

August 23, 2017

If you have multiple federal student loans that you are paying off separately, you can consolidate all of them into one. Once you consolidate your loans, your previous loans are paid off by the government and replaced with one direct consolidation loan. The process is free and managed by the government.

Besides removing the hassle of taking care of many loans individually, there are other benefits to consolidating your loans, as well as some downsides. Read on to see whether you should or should not consolidate your loans.


You have multiple loan services that make payments difficult to manage.

Consolidation means you’ll be paying one monthly bill for all of these loans, simplifying the process and making it easier to pay on time.

You want more time to pay off our loans and smaller monthly payments.

Consolidation will allow for up to 30 years of repayment period, lowering your monthly payments.

You're interested in other repayment plan options and forgiveness programs.

Consolidating your loans could open up new options like income based repayment plans and forgiveness programs, depending on types of loans you already have.

You want to switch variable-rate loans to fixed-interest loans.

Loan consolidation will allow you to change to a fixed-interest repayment plan.


You'd rather save on interest than have a longer repayment period.

Consolidation usually lengthens the repayment period, so you might end up paying more interest when you’re finished.

You would rather keep various borrower benefits associated with your current loans.

If you enjoy interest rate discounts, principal rebates or loan cancellation benefits, such benefits will disappear along with your loans once you consolidate.

You've made significant progress towards qualifying for loan forgiveness.

Once you consolidate, you lose credit for the payments you’ve already made for loan forgiveness and start from square one.

Bottom Line

If you’re overwhelmed with the number of student loans or would like a better interest-rate and repayment plan, student loan consolidation is a great way to relieve yourself of these burdens. On the other hand, if you have no trouble managing the loans or have made significant progress in qualifying for loan forgiveness, consolidation may not be the choice for you. 

Regardless, since the process is free and government managed, it’s worth looking into in detail at