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Should I consolidate my federal student loans into a federal Direct Consolidation Loan?

There are many reasons to consolidate your federal student loans—to qualify for Public Service Loan Forgiveness (PSLF), to access different repayment options, to get out of default, to combine your loans into a single payment, or to change the type of interest rate you have.

Visit Department of Education’s (ED) website for the latest PSLF guidance.

If you are thinking about consolidating your federal student loans into a federal Direct Consolidation Loan , here are some questions to ask yourself:

Do you want to qualify for Public Service Loan Forgiveness (PSLF)?

The PSLF Program forgives the remaining balance on your Direct Loans after you have made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer.

Other federal student loans such as Federal Family Education Loan (FFEL) Program or the Federal Perkins Loan (Perkins Loan) Program may become eligible if you consolidate them into a Direct Consolidation Loan.

If you consolidate before May 1, 2023, you might also benefit from one-time account adjustments performed by the Department of Education that give borrowers more qualifying payments toward loan forgiveness under Income-Driven Repayment and PSLF.

If you have both commercially-held Federal Family Education Loans and Direct Loans, do not consolidate them all together if you also qualify for one-time federal debt cancellation. One-time cancellation can only be applied to your existing Direct Loans if they were disbursed on or before June 30, 2022, and to consolidation loans comprised of any FFEL or Perkins loans if you applied for consolidation before September 29, 2022. You can still consolidate your commercially-held FFEL loans into a Direct Consolidation Loan while leaving your pre-existing loans alone.

Do you want access to different repayment options?

A Direct Consolidation Loan could make you eligible for several repayment plans that may not be currently available to you. If you have federal loans through the Federal Family Educational Loan (FFEL) program or the Perkins loan program, you may be able to consolidate those loans to qualify for several repayment programs.

Consolidating federal Perkins loans may cause you to give up other benefits. Borrowers with Perkins loans should talk to their servicers about consolidation.

Do you want to get out of default?

Consolidation allows you to pay off defaulted federal loans with a new loan and new repayment terms. If you cannot afford to repay your loan in full, consolidation is the fastest way to get out of default and enroll in one of the U.S. Department of Education’s other payment plans.

Warning: Consolidating federal loans may cause you to give up other benefits. Borrowers with Perkins loans (which qualify for a separate cancellation program) or those serving in the military should talk to their servicers about the risks associated with consolidation.

Do you want to combine more than one federal loan into a single payment?

Loan consolidation can simplify your monthly payments by rolling multiple loans into one loan. After consolidating your loans, you will only have to make a payment to one student loan servicer. This may make it easier to keep track of your student loans.

Do you want a fixed interest rate loan instead of a variable rate loan?

Some older federal student loans have a variable interest rate. If you have a variable rate student loan, your interest rate can go up or down over time. Direct Consolidation Loans have a fixed interest rate, meaning your interest rate will not change over the life of the loan.

The fixed interest rate for a Direct Consolidation Loan is the weighted average of the interest rates of the loans being consolidated, rounded up to the nearest one-eighth of a percent. While consolidating your loans may slightly increase your interest rate, it will lock you into a fixed interest rate, so your new payment won’t change.