Manage Your Money

Master the skills that can help you manage money throughout life.

Weighing the Pros and Cons of Loan Consolidation

Repayment problems? Loan consolidation may help

If you make payments for multiple loans, you might want to combine or consolidate your loans into one for repayment efficiency. You can also potentially lower your monthly payment. To help you decide whether consolidating your loans is right for you, consider the pros and cons of loan consolidation. Note that private education loans are not eligible for consolidating with a federal consolidation loan.


By consolidating your loans, you may:

  • Combine multiple loan balances under a single loan holder — the U.S. Department of Education (ED) — so that you have to make only one monthly payment

  • Lower your monthly payment amount by extending the repayment period (up to 30 years)

  • Lock in a fixed interest rate for the entire repayment period of the loan


If you consolidate your loans into a new loan, you may:

  • Pay more interest over the life of your loan if the repayment period is extended. In this case, the best strategy is to repay your loan as soon as you can. Less interest will accumulate given a shorter repayment period.

  • Lose some benefits offered with the original loan (for example, interest rate discounts).

  • Forfeit a portion of your grace period if you consolidate before your grace period is over. Try to consolidate toward the end of your grace period.


Access the Direct Consolidation Loans website for more information about obtaining a Direct Consolidation loan.

Your browser is out-of-date!

Update your browser to view this website correctly. Update my browser now