Throughout your time at college, you’ll probably take out multiple student loans, which can easily pile up. Then, you’ll have to keep track of all the different payment dates, interest rates, and loan amounts for each loan. A way to make this simpler is through student loan consolidation.

What Is Student Loan Consolidation? 

Student loan consolidation is the process of combining some or all of your federal student loans into one new loan. That way, it’s easier to manage and you only have one payment instead of several. However, Direct Consolidation Loans are only available for federal student loans. If you have private student loans and you’d like to do the same, you can refinance your private student loan

Commonly Asked Questions About Student Loan Consolidation

There’s a lot you need to know about student loan consolidation before deciding if it’s the best move for you. Here are some commonly asked questions to look over and think about before making a decision. 

What is the Difference Between Refinancing and Consolidating Student Loans? 

The biggest difference is that you can consolidate only federal student loans. Meanwhile, you can refinance both federal and private student loans. Here are a couple of other differences to be aware of. 

Refinancing Consolidating 
How will it affect my interest rate?You can get a lower interest rate as long as you have good finances. Or, at least better finances than when you first took out the loan. This includes a good credit history and income. Your interest rate will either stay the same or go up. They’ll average all your loan interest rates together and then round up to the nearest ⅛ of a percentage.
Will I save money? Yes. Generally, refinancing helps you save money because you can negotiate better loan terms.You might be able to get a lower monthly payment. Yet, in the long run, it won’t save you money because you might get an extended loan term and pay more interest over time.
Can I keep my access to federal benefits? No. Refinancing your federal loans means turning them into a new private student loan. Doing so will result in you losing your borrower benefits.Yes. Because it’s done through the federal government, you’ll keep access to your benefits. In fact, in some cases, you might need to consolidate to access certain federal benefits. 

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When Should You Consolidate Your Student Loans? 

To qualify for a Direct Consolidation Loan, your student loans need to be in the repayment period or, at least, the grace period. This can be as a result of graduating, dropping out, or falling below half-time enrollment. If you’re still in school, you cannot consolidate your student loans. 

There are a couple of other things you should consider when deciding. First, you should consider consolidating your student loans if you want to have one payment instead of many. If it’s currently too hard to make all your monthly payments, then consolidating is a good idea. Also, consider consolidating if you want to qualify for federal benefits. These include benefits like income-driven repayment plans and possible loan forgiveness. Some loans like the Perkins Loan or a Parent PLUS Loan need to be consolidated to access those benefits. 

Does it Cost Money to Consolidate Student Loans? 

No. There are no costs associated with applying for or going through the process of consolidating. So, you don’t have to worry about spending any more money to be able to simplify your loan payments. 

Does Student Loan Consolidation Affect Your Credit Score? 

No. Most federal student loans don’t have any kind of credit requirement. This includes Direct Consolidation Loans. So, consolidating your loans won’t need any kind of credit check, and your credit score will remain the same as before. 

How Long Does it Take for Student Loan Consolidation? 

You start the whole process by filling out the application, which will take about 30 minutes. From there, hearing back or getting approved can take anywhere from a few weeks to a few months. Typically, you’re looking at around 30-45 days. 

Until you get the green light from both your old and new lender, you need to keep on making regular payments in the meantime.

Can Direct Consolidation Loans Be Forgiven? 

Yes. One of the biggest federal benefits you can receive is loan forgiveness. If you consolidate, you’ll still have access to federal benefits including loan forgiveness. As mentioned earlier, there are even loans that you have to consolidate to qualify. 

Final Thoughts from the Nest 

Now that you know more about consolidation, you can use this information to help you make a decision. Consolidation can help simplify payments and, in some cases, qualify you for certain federal benefits. On the other hand, it won’t bring down your interest rate or save you money in the long run. It’s really up to you, your situation, and whether you think consolidation is the right move for you. If it is, head over to the Direct Consolidation Loan Application online to get started. 


If you also have private student loans and want to know if you should refinance your student loan, you can get started by filling out the Sparrow Application. It will help match you to what you qualify for at 17+ lenders through a single application. From there, you can compare your options before making a final decision.

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