Ask Jeni: Is Student Loan Debt Consolidation Beneficial?
December 26, 2018

How can I consolidate my student loans? How do I know if consolidation will be beneficial?


If you want to consolidate your federal student loans you can apply for a Direct Consolidation Loan on the federal aid website.


A couple of things to know about student loan consolidation:

  1. Direct Consolidation Loans are only for federal student loans.
  2. You won’t get a lower interest rate. Your consolidated loan interest rate is the weighted average of all your loans interest rates. Refinancing is the only way to lower your interest rates. Refinancing privatizes federal loans and makes them ineligible for many federal loan benefits, like many types of loan forgiveness.
  3. If you’re already working toward Public Service Loan Forgiveness (PSLF) or Income-Driven Loan Forgiveness you may want to reconsider consolidation. A Direct Consolidation Loan is treated like a brand new loan so the clock would restart all over again at zero eligible payments made.


Student loan consolidation can be beneficial if you have older FFEL student loans you would like to make eligible for PSLF, when you consolidate they become a Direct Consolidation Loan which is eligible for forgiveness under PSLF.

Consolidation can also be beneficial if you’re just looking to simplify multiple federal student loans with multiple interest rates. After you consolidate, you have one loan, with one fixed interest rate.