Student borrowers may consolidate, or refinance, their federal student loans, including Direct, Stafford, and Perkins loans, into a federal consolidation loan. There are two main reasons borrowers decide to consolidate their federal loans: a fixed interest rate and lower monthly payments.
Other reasons include the convenience of having just one loan with one monthly payment and preventing one from defaulting on one's loans.
However, extending your loan term will increase how much interest you pay, and you may lose any benefits associated with your existing loans, including interest-rate discounts, principal rebates, Perkins loan cancellation benefits, and any credit you’ve earned toward income-based repayment or Public Service Loan Forgiveness.
If you have loans whose benefits you don’t want to lose, you can leave them out of the consolidation process.
If you are interested in an automatic payment process, contact your consolidation loan servicer.
And you don’t have to consolidate at all if you don’t want to; it’s just an option.
Once you do consolidate, the decision is irreversible.
The loan must not be in collections, and you must either make three consecutive monthly payments to get current first, or choose one of the income-linked repayment plans when you consolidate.
Once your consolidation loan is approved and paid out, your first payment on the new loan will be due within 60 days.