How To Consolidate Federal and Private Student College Loan Debt

Consolidation loans are available for both students and parents during the grace period or after loans enter repayment. Loan consolidation for students is no longer available while they are attending school. Parents can consolidate PLUS loans at any time. Before consolidating a student loan, take time to see if the consolidation will be beneficial. Certain lenders offer private student consolidation loans for students with private education loans. Consolidation loans are available for almost all federal student loans.

Advantages for Student Loan Consolidation

One of the largest advantages for consolidating student loans is access to alternate repayment plans beyond the standard ten-year term. Consolidation loans often reduce the monthly payment amount by extending the term of the loan beyond the ten-year repayment plan. Loans can be extended from 12 to 30 years, depending on the loan amount.

Student loan consolidations may give the borrower an opportunity to lock in a low interest rate for the life of the loan.

Consolidation will eliminate having to make multiple payments to different lenders each month. The borrower will have a single monthly payment to one holder.

Disadvantages of Student Loan Consolidation

The largest disadvantage to extending the loan terms on a consolidation is the increase of interest paid on the outstanding debt. The total overall repayment of the loan will increase depending on the repayment time frame.


Incentives offered by the current lenders of student loans could be lost by consolidating loans. Review the terms of consolidation closely.

Perkins loans will lose interest subsidy and cancellation benefits if they are included in the consolidation loan.

Loan Calculation Chart for Student Loan Consolidation

The average interest rate for a student loan consolidation is 6.8 percent. Repayment term length is based on the total education debt being consolidated. The following information are examples of typical monthly payments at 6.8% interest after loan consolidation:

Consolidated Amount / Repayment Term / Monthly Payment

$20,000 / 10 years / $230

$30,000 / 10 years / $345

$40,000 / 15 years / $355

$50,000 / 20 years / $382

$60,000 / 25 years / $416

Interest rate for the consolidated loan will be the current weighted average of the loans included in the consolidation and rounded up to the nearest one-eighth percentage.

Considerations Regarding Student Loan Consolidation

There are no fees or up front costs for consolidating student loans. Certain federal eduction loans, such as PLUS loans and the Stafford, may included fees, these fees are always deducted from the disbursement check. Be leary of any loans with upfront fees, this is usually an advanced fee loan scam.

Applying for a consolidation loan can take between 30 to 90 days. Always continue making monthly payments on any loans until notification of the new consolidation loan is complete. Once loans are consolidated, the first payment is due within 60 days.