Consolidation & Refinancing

Graduates who have multiple loans may consider loan consolidation or refinancing when deciding on different payment options. Loan consolidation and refinancing give graduates the option to simplify their debt and keep track of fewer payments. 

Direct Loan Consolidation is a free option available for federal student loan borrowers (private student loans are not eligible). A consolidation loan allows you to combine several types of federal student loans into a single new loan with one monthly payment and a fixed interest rate. Most federal education loans are eligible for consolidation, including the Direct Unsubsized Loan and the Graduate PLUS Loan. Generally, you are able to consolidate after you graduate, leave school, or drop below half-time enrollment.

Once your loans are combined into a Direct Consolidation Loan, they can't be removed. For more comprehensive information about federal loan consolidation, visit Federal Student Aid. To submit an application for a Direct Consolidation Loan, visit
Benefits Drawbacks
Simplify repayment: Only one monthly payment for federal loans. If you have federal student loans with different loan servicers, consolidation will give you a single loan with one monthly bill.
Interest rate: The fixed rate is the weighted average of the interest rates on the loans being consolidated, rounded up to the nearest one-eighth of one percent, leaving you with a slightly higher interest rate.
Lower monthly payments: 
Consolidating loans can extend your repayment period, and may result in lower monthly payments. It may also give you access to additional income-driven repayment plans and Public Service Loan Forgiveness. 
Can't strategize which loans to pay off first: If you pay extra amounts on higher-rate loans, you'll pay less interest overall. Consolidation makes you unable to target the highest-rate loan for quicker repayment.                              
Renewed hardship options:  
Consolidating loans can reset your time limits for loans previously in deferment and forbearance, and can help students get out of default. 
Potential increase for the total cost of loans: Because you may have a longer period of time to repay, you might make more payments and may pay more in interest.