Personal Finances

Consolidating Student Loans

If you have several student loans, you might consider consolidating them into one loan for convenience. You can consolidate under a federal program or under a private one. As a general rule, you can consolidate only once, so make sure you get the best deal you can.

Terms of loan

Under a consolidation loan, you will no longer be subject to a variety of different terms and repayment schedules. You won’t have to pay several different lenders. You will have only one lender, with one set of terms and repayment.

Length of loan

When consolidating, you can get a new loan with a longer maturity. The longer time can result in lower monthly payments.


Interest rates are fixed for the life of the consolidation loan. If your new loan stretches out over a longer period than your previous ones (it most likely will), the total interest you pay could end up being higher than that of the individual loans you started with.

Another factor to consider is the interest rate itself. Interest rates on loans change occasionally, so take into account the rates on your original loans when comparing them to the rate you get on a consolidation loan. If they are lower, it will not make sense to consolidate.

Consolidating under private programs

Private lenders also provide loans. In general, their rates are higher than those of federal loans. Also, with private loans, you likely will not get the generous repayment options and the rights of deferment and cancelation. Compare programs carefully before making a choice.

You won’t have to pay several different lenders.
You can get a new loan with a longer maturity.

For more information

There are additional nuances in consolidation loans. You can get more details and answers to your questions by going to the Federal Direct Consolidation Loans site at