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How To Consolidate Private and Federal Student Loans Into One Payment

Consolidating multiple student loans into a single loan with one monthly payment can lead to significant savings. But it’s important to evaluate all your options first.

Author
By Angela Brown

Written by

Angela Brown

Freelance writer

Angela Brown is a student loan, personal finance, and real estate expert with over six years of experience. Her work has been featured at LendingTree, FinanceBuzz, and Yahoo Finance.

Edited by Lisa Davis

Written by

Lisa Davis

Lisa Davis has been a writer and editor for more than eight years. Her work has appeared on Texas Lifestyle Magazine and RetailMeNot.

Reviewed by Renee Fleck

Written by

Renee Fleck

Renee Fleck is a student loans editor with over six years of experience. Her work has been featured in Fast Company, Morning Brew, and Sidebar.io, among other online publications. She is fluent in Spanish and French and enjoys traveling to new places.

Updated March 27, 2025

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Credible takeaways

  • Consolidating multiple student loans into one simplifies repayment and helps you manage your finances more easily.
  • Federal student loan consolidation doesn't necessarily lower your interest rate, but it locks in a fixed rate for the duration of the loan and allows for potential loan forgiveness with income-driven repayment plans.
  • Refinancing lets you consolidate both federal and private student loans into one, but it's not the right move for everyone.

It's common to leave college with several student loans waiting to enter repayment as soon as you graduate or drop below full-time status. Maybe you had to borrow every year to cover tuition, or perhaps one loan wasn't enough to cover the full cost of attendance. Whatever the reason, juggling multiple payments on multiple loans can be overwhelming.

Consolidating those loans into a new loan with one payment is a simple way to lower your monthly costs and streamline the repayment process.

If you have federal student loans and private student loans, you can refinance both into a new private loan. But you should consider your options before deciding because you'll lose certain federal loan benefits, including income-driven repayment plans and eligibility for loan forgiveness.

How to consolidate student loans

There's an important distinction between student loan consolidation and refinancing.

When people say “student loan consolidation,” they're referring to federal student loan consolidation offered by the U.S. Department of Education through a Direct Consolidation Loan. This loan combines multiple federal student loans into one to simplify repayment or access specific repayment options and forgiveness programs. 

Your credit score isn't a factor because you won't necessarily get a lower interest rate with consolidation. Instead, the interest rate is based on a weighted average of the rates you paid on the loans you want to consolidate.

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Keep in mind:

Federal student loans have fixed interest rates determined by Congress each year. When students graduate, they could have four different federal student loans with four different interest rates.

On the other hand, private student loan lenders don't offer “consolidation” in the federal sense. Instead, they offer “refinancing.” When you refinance, the private lender you choose pays off one or more of your existing student loans — federal, private, or both — and issues you a new loan with a new interest rate and loan terms. Most people refinance their student loans with a private lender to get a lower rate, reduce their monthly payments, or shorten the loan term. Your interest rate on the new loan is based on your credit score and income.

Find out: How Much Do I Owe in Student Loans?

Federal student loan consolidation

The Department of Education offers federal student loan borrowers Direct Consolidation Loans at no cost, which can help make loan repayment more manageable. Most student loans, except private ones, are eligible for consolidation, including defaulted loans. You're eligible for consolidation after leaving school or dropping below half-time enrollment, and you can consolidate one, two, or all of your federal loans.

Applying for a consolidation loan takes about 30 minutes. You'll be asked to choose a new repayment plan: a fixed-payment or an income-driven repayment (IDR) plan.

Fixed repayment plans include the Standard Repayment Plan, Graduated Repayment Plan, and Extended Repayment Plans. These plans calculate your monthly payment based on how much you owe and the interest rate assigned to your new Direct Consolidation Loan.

IDR plans calculate your monthly payment based on your income and family size. They include the Saving on a Valuable Education (SAVE), Pay As You Earn (PAYE), Income-Based Repayment (IBR), and Income-Contingent Repayment (ICR) plans. If consolidating a defaulted loan, you must pick an income-driven repayment plan.

According to Federal Student Aid, “After paying a certain number of months of qualifying payments on an IDR plan, you can get the remaining balance of your loan(s) forgiven.” You have to recertify your plan every year, even when there's no change to your income or family size.

When you consolidate federal student loans, the government determines the interest rate based on your combined loans. It rounds up the rate by 0.125 of a percentage point, so most borrowers don't receive a lower interest rate, but the rate stays the same for the remainder of the loan.

Federal student loan consolidation pros and cons

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Pros

  • Access to IDR forgiveness programs
  • Single monthly payment
  • Eligibility for different repayment plans
  • Fixed interest rate
  • Potentially lower monthly payment
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Cons

  • Longer repayment term means paying more interest over the life of the loan
  • May not receive a lower interest rate
  • Loss of access to federal repayment and forgiveness options
  • 1.057% loan fee (before Oct. 1, 2025)

Federal student loan consolidation has several benefits, including having one loan payment and planning your budget in advance. You'll still have access to federal benefits, like income-driven repayment plans (IDR) and loan forgiveness programs, and you can switch from variable-rate loans to a fixed interest rate.

When you consolidate your federal student loans, you lose rate discounts and credit toward any payments you were making under an income-driven payment plan. Repayment starts 60 days after the loan is disbursed.

Besides Perkins Loans, which have a fixed interest rate of 5%, interest rates for federal student loans depend on the loan type you want. For the 2024-25 academic year (July 1, 2024 to July 1, 2025), federal interest rates are:

Loan type
Fixed interest rates
Loan fees
Direct Subsidized and Unsubsidized Loans for undergraduates
6.53%
1.057%
Direct Unsubsidized Loans for graduates
8.08%
1.057%
Direct PLUS Loans for parents and graduates
9.08%
4.228%

How to consolidate private student loans

When you have multiple private student loans — or multiple student loan lenders — and want to consolidate them into one monthly payment, you'll need to look into refinancing. This lets you combine the separate loan balances into a new loan with one monthly payment. Refinancing private loans can potentially get you a lower interest rate, too.

If you pick a longer term, your monthly payment will be lower, but you'll pay more interest over time. Refinancing your student loans can lower interest rates, especially if you have a good credit history or apply with a cosigner. Some private lenders allow cosigners to be released from the loan following a specific amount of on-time payments. A lower interest rate means lower monthly payments and overall loan costs.

You can compare rates from multiple private lenders to be sure you find the best fit for your financial needs.

“Before applying to refinance your student loans, I recommend checking your credit score to see where you stand. Most lenders look for a FICO score of at least 670 to qualify. If your credit needs work, consider applying with a cosigner who has strong credit and steady income, such as a spouse or a parent.”

— Renee Fleck, Student Loans Editor, Credible

 

LendKey: Best for Graduates With Excellent Credit

LendKey

4.6

Credible Rating

Check Rates

on Credible’s website

Min. Credit Score

680

Fixed APR

4.89 -

Variable APR

4.55 -

Loan Amount

$5,000 - $250,000

Term

5, 7, 10, 15

Pros and cons

More details

SoFi: Best for Member Perks

SoFi

4.5

Credible Rating

Check Rates

on Credible’s website

Min. Credit Score

6501

Fixed APR

-

Variable APR

-

Loan Amount

$5,000 up to the full balance

Term

5, 7, 10, 15, 20

Pros and cons

More details

Earnest: Best for Fair Credit

Earnest

4.8

Credible Rating

Check Rates

on Credible’s website

Min. Credit Score

665

Fixed APR

-

Variable APR

-

Loan Amount

$5,000 to 500,000

Term

5, 7, 10, 15, 20

Pros and cons

More details

Brazos: Best for Flexible Refinance Terms

Brazos

4.4

Credible Rating

Check Rates

on Credible’s website

Min. Credit Score

720

Fixed APR

3.85 -

Variable APR

4.33 -

Loan Amount

$10,000 - $400,000

Term

5, 7, 10, 15, 20

Pros and cons

More details

Citizens: Best for Current Account Holders

Citizens

4.7

Credible Rating

Check Rates

on Credible’s website

Min. Credit Score

Does not disclose

Fixed APR

5.90 -

Variable APR

6.16 -

Loan Amount

$10,000 - $750,000

Term

5, 7, 10, 15, 20

Pros and cons

More details

EdvestinU: Best for Nonprofit Lender

EDvestinU

3.8

Credible Rating

Check Rates

on Credible’s website

Min. Credit Score

700

Fixed APR

5.40 -

Variable APR

7.06 -

Loan Amount

$7,500 - $200,000

Term

5, 10, 15, 20

Pros and cons

More details

ISL Education Lending: Best for Current Students

Iowa State Loans

4.6

Credible Rating

Check Rates

on Credible’s website

Min. Credit Score

670

Fixed APR

6.94 -

Variable APR

-

Loan Amount

Up to $300,000

Term

5, 7, 10, 15, 20

Pros and cons

More details

RISLA: Best for Income-Based Repayment

RISLA

3.7

Credible Rating

Check Rates

on Credible’s website

Min. Credit Score

680

Fixed APR

3.99 -

Variable APR

-

Loan Amount

$7,500 - $250,000

Term

5, 10, 15

Pros and cons

More details

ELFI: Best for High Balances

ELFI

4.4

Credible Rating

Check Rates

on Credible’s website

Min. Credit Score

680

Fixed APR

4.88 -

Variable APR

4.86 -

Loan Amount

$10,000 up to total refinance amount

Term

5, 7, 10, 12, 15, 20

Pros and cons

More details

INvestEd: Best for Forbearance

INvested

3.9

Credible Rating

Check Rates

on Credible’s website

Min. Credit Score

670

Fixed APR

5.58 -

Variable APR

7.90 -

Loan Amount

$5,000 - $250,000

Term

5, 10, 15, 20

Pros and cons

More details

MEFA: Best for No Degree

MEFA

4

Credible Rating

Check Rates

on Credible’s website

Min. Credit Score

670

Fixed APR

6.20 -

Variable APR

-

Loan Amount

$10,000 up to the total amount

Term

7, 10, 15

Pros and cons

More details

Why you can trust our Credible experts

The Credible editorial team is independent and unbiased. Partners do not influence our editorial content. To help you find the best student loan for your situation, we conduct thorough research and analyze thousands of lender data points. Using data-driven methodologies, we score criteria that are important to you. This allows us to objectively rank student loan lenders and products. To learn more, read our methodology below.

Methodology

To determine the best student loan refinance lenders for borrowers, Credible collected more than 1,000 points of data on two dozen companies and evaluated them on several different categories: repayment options, eligibility, interest rates, loan terms, and customer support. We assigned a score out of five stars to each lender based on our findings. Below are the weightings assigned to the general categories for the best student loan companies — which comprise individual criteria that are also weighted.

  • Repayment options: 30%
  • Eligibility: 25%
  • Interest rates: 20%
  • Loan terms: 15%
  • Customer support: 10%

While the best lender for you will depend on your unique needs and financial circumstances, these findings should help answer your questions and assist you in your search for the best student loan.

Learn more about our methodology.

Private student loan refinancing pros and cons

If you have private student loans, refinancing could be beneficial if you can secure a lower interest rate on your refinance loan. You can check refinancing rates from multiple lenders without affecting your credit score. Lenders offer different rates, perks, and rate terms and have different eligibility requirements.

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Pros

  • Lower interest rates
  • Lower monthly payment
  • Flexible repayment terms
  • Auto-pay and other interest rate discounts
  • Single monthly payment
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Cons

  • Loss of access to federal benefits (when refinancing federal loans)
  • Longer repayment terms mean higher loan cost
  • Hard credit check
  • Strict eligibility requirements
  • Origination fees (depending on the lender)

Once you apply, your credit score will be dinged with a hard credit check, so be aware before applying. After processing the loan, your new lender will pay off your previous loan balances. Continue making payments on your existing loans until you receive confirmation that your new lender has paid them off.

Check Out: When Is the Best Time To Refinance Student Loans?

Student loan consolidation calculator

Whether you have federal or private student loans, use an online loan calculator to estimate your new payments and decide whether refinancing or consolidating are good options. A calculator can show you how your monthly payments, interest rate, and total repayment costs might change after you consolidate them. Toggle between different loan terms, like 10-, 15-, or 20-year options, to find the right fit.

FAQ

Can you consolidate federal and private student loans?

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Can I get forgiveness if I consolidate my student loans?

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How long does student loan consolidation take?

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Meet the expert:
Angela Brown

Angela Brown is a student loan, personal finance, and real estate expert with over six years of experience. Her work has been featured at LendingTree, FinanceBuzz, and Yahoo Finance.