If you have multiple student loans, you might be wondering if consolidating them could make your life easier. Consolidating student loans means combining them into one new loan, which can simplify your payments and potentially lower your interest rate.
However, consolidation is not always the best option for everyone, and there are some important factors to consider before you decide to do it.
In this blog post, we will explain how to consolidate student loans, what are the benefits and drawbacks of consolidation, and what are the alternatives to consolidation. We will also answer some frequently asked questions about consolidation and provide some tips on how to choose the best consolidation option for your situation.
Student Loan Debt Statistics
- Student loan debt in the United States totals $1.814 trillion; annual growth resumed in 2024 following a year-over-year (YoY) decline in 2023.
- The outstanding federal student loan balance is $1.661 trillion; 42.5 million student borrowers have federal loan debt.
- Federal student loan debt represents 91.6% of all student loan debt; 8.43% of student loan debt is private, including $30.7 billion in refinance loans.
- The average federal student loan debt balance is $39,075, while the total average balance (including private loan debt) may be as high as $42,673.
- 11.3% of federal student loans dollars were delinquent as of 2025’s second financial quarter (2025 Q2); 1.61% of private student loans were in default as of 2024 Q1.
- The average public university student borrows $31,960 to attain a bachelor’s degree.
Total Student Loan Debt (YoY Change)
| Quarter | Total (in millions) | YoY Change |
|---|---|---|
| 2025 Q2 | $1,813,619.89 | 4.16% |
| 2025 Q1 | $1,805,464.60 | 2.97% |
| 2024 Q4 | $1,778,376.73 | 2.85% |
| 2024 Q3 | $1,772,891.41 | 2.33% |
| 2024 Q2 | $1,741,137.84 | -1.14% |
| 2024 Q1 | $1,753,333.67 | -1.22% |
| 2023 Q4 | $1,729,139.13 | -1.98% |
| 2023 Q3 | $1,732,575.34 | -1.66% |
| 2023 Q2 | $1,761,243.55 | 0.99% |
| 2023 Q1 | $1,774,909.90 | 1.57% |
| 2022 Q4 | $1,764,067.41 | 1.28% |
| 2022 Q3 | $1,761,742.00 | 1.28% |
| 2022 Q2 | $1,744,007.00 | 1.45% |
| 2022 Q1 | $1,747,455.51 | 1.67% |
| 2021 Q4 | $1,733,415.18 | 2.34% |
| 2021 Q3 | $1,739,443.83 | 2.53% |
| 2021 Q2 | $1,719,067.51 | 2.78% |
| 2021 Q1 | $1,718,706.56 | 2.80% |
10 Essential Personal Finance Tips for Students
What is student loan consolidation?
Student loan consolidation is a process of combining multiple federal student loans into one new loan through the Department of Education. This new loan is called a Direct Consolidation Loan, and it has a fixed interest rate that is based on the weighted average of the interest rates of the loans you consolidate, rounded up to the nearest one-eighth of a percent.
You can consolidate most types of federal student loans, including Direct Loans, Stafford Loans, Perkins Loans, PLUS Loans, and FFEL Loans. However, you cannot consolidate private student loans with federal student loans. You can only consolidate private student loans with other private student loans through a process called refinancing, which we will discuss later.
Why consolidate student loans?
There are several reasons why you might want to consolidate your student loans, such as:
- To simplify your payments. If you have multiple student loans with different servicers, due dates, and payment amounts, consolidating them into one loan can make it easier to manage your debt. You will only have one monthly payment to one servicer, and you can choose a repayment plan that suits your budget and goals.
- To lower your monthly payment. Consolidating your student loans can lower your monthly payment by extending your repayment term. You can choose a repayment term of 10 to 30 years, depending on the amount of your consolidated loan. However, keep in mind that a longer repayment term means more interest over time, so you might end up paying more in total.
- To access different repayment options. Consolidating your student loans can give you access to different repayment plans that are not available for some types of federal loans. For example, if you have Perkins Loans or FFEL Loans that are not owned by the Department of Education, you cannot qualify for income-driven repayment plans or Public Service Loan Forgiveness (PSLF) unless you consolidate them into a Direct Consolidation Loan.
- To switch servicers. If you are unhappy with your current student loan servicer, consolidating your student loans can allow you to switch to a different one. You can choose from four servicers: FedLoan Servicing (PHEAA), Great Lakes Educational Loan Services Inc., Navient, and Nelnet.
How to consolidate student loans?
If you decide to consolidate your student loans, here are the steps you need to follow:
- Use the online Direct Loan consolidation application. The entire application process for a Direct Consolidation Loan can be handled online at StudentAid.gov. You will need to log in with your FSA ID and select the loans you want to consolidate.
- Select your new student loan servicer. You can choose from four servicers: FedLoan Servicing (PHEAA), Great Lakes Educational Loan Services Inc., Navient, and Nelnet. You should research each servicer and compare their customer service ratings, online tools, and borrower benefits before making a decision.
- Choose your repayment plan. You can choose from several repayment plans for your consolidated loan, including standard, graduated, extended, income-based, income-contingent, income-sensitive, and pay as you earn. You should compare each plan and see how they affect your monthly payment amount, total interest paid, and repayment term.
- Fill out your personal information. You will need to provide some personal information such as your name, address, phone number, email address, Social Security number, driver’s license number, and employer information.
- Review and sign. You will need to review the terms and conditions of your consolidated loan and sign the promissory note electronically. You should also keep a copy of the promissory note for your records.
What are the pros and cons of consolidating student loans?
Student loan consolidation is the process of combining multiple student loans into one loan. This can be done through a private lender or through the federal government. There are both pros and cons to consolidating student loans.
Pros of consolidating student loans:
- Lower monthly payments. When you consolidate your student loans, you may be able to get a lower interest rate, which can lead to lower monthly payments.
- One monthly payment. With a consolidated loan, you’ll only have to make one monthly payment. This can make it easier to budget and stay on track with your repayment.
- Easier to manage. Consolidating your student loans can make it easier to manage your debt. You’ll only have one loan to track, and you’ll only have to deal with one lender.
Cons of consolidating student loans:
- Longer repayment period. When you consolidate your student loans, you may have to extend your repayment period. This means you’ll pay more interest over the life of the loan.
- Lose federal benefits. If you consolidate your federal student loans with a private lender, you may lose some federal benefits, such as income-driven repayment plans and Public Service Loan Forgiveness (PSLF).
- Fees. There may be fees associated with consolidating your student loans. These fees can add up, so it’s important to shop around and compare different lenders before you choose one.