Feeling overwhelmed by your student loans? Wondering if you should consolidate your student loans?

We asked the U.S. Department of Education to give us some information and advice.

We know: 5 Tips on Student Loan Consolidation

What does it mean to consolidate my student loans?

If you have more than one student loan, you may be able to consolidate the loans into one loan and one monthly payment. This is called a Direct Consolidation Loan, and it is based on the weighted average interest rate of each of the loans you are putting together. The new rate becomes fixed for the life of the loan and canít exceed 8.25%

What student loans can I consolidate?

The following federal education loans are eligible for consolidation into a Direct Consolidation Loan:

  • Direct Subsidized and Unsubsidized Loans
  • Federal Subsidized and Unsubsidized Federal Stafford Loans
  • Direct PLUS Loans and Federal PLUS Loans **
  • Direct Consolidation Loans and Federal Consolidation Loans
  • Guaranteed Student Loans
  • Federal Insured Student Loans
  • Federal Supplemental Loans for Students
  • Auxiliary Loans to Assist Students
  • Federal Perkins Loans
  • National Direct Student Loans
  • National Defense Student Loans
  • Health Education Assistance Loans
  • Health Professions Student Loans
  • Loans for Disadvantaged Students
  • Nursing Student Loans

** PLUS loans are eligible for in-school consolidation only if the parent borrower also includes other eligible, non-PLUS loans in an in school period

What factors should I consider before I decide to consolidate?

Consolidating your loans is not always the best financial move. You should think about:

  • If you are close to paying off your loans, consolidating may not be a good choice.
  • Check with your current lender or lenders before you consolidate, in case they can offer you better terms.

What are some of the benefits of consolidating my student loans?

Consolidating your loans may:

  1. Reduce your overall interest rate.
  2. Reduce payments to one bill each month.
  3. Decrease the amount of your monthly payment, in some cases.
  4. Loan consolidation does not require any new fees.
  5. Get a choice of 4 repayment options, including an Income Contingent Repayment Plan. These plans are flexible to meet the different needs of borrowers.
  6. Direct Consolidation Loans offer several deferment options. If you have exhausted the deferment options on your current Federal education loans, a Direct Consolidation Loan could renew those deferment options.

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