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Should I consolidate my federal loans?

how do i consolidate my student loans

updated 7/30/2013

Loan consolidation can be used to simplify monthly payments by rolling multiple loans into one loan. While you generally won’t get an interest rate break, you will have a single monthly payment for your new federal direct consolidation loan. If you have federal loans originated under the Federal Family Educational Loan (FFEL) program or the Perkins loan program, you may be able to consolidate those loans into a new Direct Loan to qualify for Public Service Loan Forgiveness (PSLF).

You can learn more about what type of loan you have through the National Student Loan Data System (NSLDS), available at This database only contains information about federal student loans.

Tip. Consolidating federal loans may cause you to forfeit other benefits. Employees with Perkins loans or those serving in

the military should talk to their servicers about the risks associated with consolidation.

Consolidation loans provide access to several alternative repayment plans besides the 10-year repayment that is standard for federal loans. These include extended repayment, graduated repayment, and Income-Based Repayment (IBR).

If you’re enrolled in IBR, it might be simpler to have a consolidation loan, since you won’t need to submit documents about your income to multiple servicers.

Federal loan consolidation will not lower your interest rate. In fact, for some borrowers, your interest rate might go up slightly, since your weighted-average interest rate gets rounded up to the nearest eighth of a percent.

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