Student Loans: Which Loan Can I Consolidate?

student-loanCollege can be some of the best years of your life. For many young people, it is a time to gain independence, make friends and prepare for your future career. Higher education can teach you the skills you need to land your dream job, but for most, a college education means taking out loans. When it comes time to start paying back your student loan debt, a loan consolidation makes repayment easy and can even help you reduce your interest rate.

Which loans can I consolidate?

A large portion of your student debt probably consists of federal loans. There are many different types of federal loans that can be consolidated under the Federal Direct Loan Program. These include:

  • Subsidized and unsubsidized Stafford loans
  • Direct subsidized and unsubsidized loans
  • PLUS loans
  • Perkins loans
  • SLS loans

Some students also have private student loan debt. Private student loans cannot be consolidated with federal loans; they must be separately consolidated.

Should I consolidate my loans?

There are many factors to consider when deciding whether to consolidate your student loans. A loan consolidation combines all of your qualifying loans into one loan, simplifying repayment and making it easier to keep track of your loan. Consolidating your loans can mean a lower monthly payment or lower interest rates, but it is important to evaluate all the conditions of your loans when you decide if consolidation is right for you.

For example, you can stretch your repayment period up to 30 years when you consolidate your loans, but that will usually mean that you will pay more interest over time. Some federal loans offer special benefits, such as loan forgiveness for public service, principal rebates or interest rate reductions. If you consolidate your loans, you may forfeit these advantages.

Federal loan consolidation offers many flexible options for repayment. Repayment terms range from 10 to 30 years. You can select a loan based on term and interest rate or you can choose a payment plan that is based on your salary. This means that your payment will be adjusted according to how much you can afford based on your salary.

Graduates holding private student loans need to consolidate these loans separately. However, they should consider the same factors as federal loans, such as the length of the loan term and the interest rate. Only a few lenders offer private student loan consolidation and those lenders only offer variable interest rates. A personal loan with better terms than your private student loan is another option for consolidation.

When can I start a consolidation?

You are eligible to consolidate your loans after you graduate whether you have already begun repayment on your existing loans or are still in the repayment “grace period.” The grace period is a transitional time after a borrower graduates when they are not yet required to make payments on their loans. Interest will accrue during this time on some federal loans and unpaid interest will be added to the principal when repayment starts.

Students who have taken a leave of absence from school or reduced their credit hours to below half-time status are also usually eligible to consolidate their loans. The same grace period rules generally apply to these students as well.


Loan consolidation can be a smart move for any newly minted graduate. Carefully weigh all of your options and make sure you understand all the terms and conditions of your new consolidation loan. Remember that a long repayment period can cost more in the long run, but it can also reduce your payments. There are also income-based repayment options that adjust your payments according to your current salary. Make sure you understand your current loans — they may have benefits you will lose in a consolidation. Understanding how the conditions of your new loan affect your payments is critical before you proceed with consolidating your loan.

Consolidating your loans can be the first step toward simplifying repayment and finding favorable terms that could save you money. There is no better way for recent college graduates to show off their smarts than by doing the research, considering the options and coming up with a plan to repay their student debt.

If you have any questions, please ask below!