Last Updated on August 28, 2023
If you have a lot of student loan debt, you might be wondering how many times you can consolidate your student loans.
The good news is that there’s no limit on how many times you can consolidate your student loans. The bad news is that each time you consolidate, the interest rate could increase.
Consolidating your loans isn’t something to take lightly. You should weigh the pros and cons carefully before making any decisions about consolidating your student loans.
But let’s find out what happens when you consolidate more than once—and what happens if you don’t!
How Many Times Can You Consolidate Student Loans
Consolidating federal student loans is not immediate. Although it usually takes a few weeks to obtain a Federal Direct Consolidation loan, sometimes it can take months.
Consolidation typically takes 30-45 days.
If you have multiple student loans you may be able to combine them into one loan with a fixed interest rate based on the average of the interest rates on the loans being consolidated. Learn more about loan consolidation.
A Direct Consolidation Loan allows you to consolidate multiple federal education loans into one loan at no cost to you.
Through your completion of the free Federal Direct Consolidation Loan Application and Promissory Note, you will confirm the loans that you want to consolidate and agree to repay the new Direct Consolidation Loan.
Once the consolidation is complete, you will have a single monthly payment on the new Direct Consolidation Loan instead of multiple monthly payments on the loans you consolidated.
A Direct Consolidation Loan allows you to consolidate (combine) multiple federal education loans into one loan. The result is a single monthly payment instead of multiple payments. Loan consolidation can also give you access to additional loan repayment plans and forgiveness programs.
Should I consolidate my loans?
The answer depends on your individual circumstances.
Pros
If you currently have federal student loans that are with different loan servicers, consolidation can greatly simplify loan repayment by giving you a single loan with just one monthly bill.
Consolidation can lower your monthly payment by giving you a longer period of time (up to 30 years) to repay your loans.
If you consolidate loans other than Direct Loans, consolidation may give you access to additional income-driven repayment plan options and Public Service Loan Forgiveness (PSLF). (Direct Loans are from the William D. Ford Federal Direct Loan Program.)
You’ll be able to switch any variable-rate loans you have to a fixed interest rate.
Cons
Because consolidation usually increases the period of time you have to repay your loans, you will likely make more payments and pay more in interest than would be the case if you didn’t consolidate.
When you consolidate your loans, any outstanding interest on the loans that you consolidate becomes part of the original principal balance on your consolidation loan, which means that interest may accrue on a higher principal balance than might have been the case if you had not consolidated.
Consolidation may also cause you to lose certain borrower benefits—such as interest rate discounts, principal rebates, or some loan cancellation benefits—that are associated with your current loans.
If you’re paying your current loans under an income-driven repayment plan, consolidating those loans will cause you to lose credit for any payments made toward income-driven repayment plan forgiveness.
If consolidation would cause you to lose the benefits associated with some of your current loans and you are working toward earning those benefits, you should not include those loans in your new Direct Consolidation Loan. When you apply for a Direct Consolidation Loan, you don’t have to consolidate all of your eligible loans.
For example, if you have Federal Perkins Loans and you are employed in an occupation that would qualify you for Perkins Loan cancellation benefits, you may not want to include your Perkins Loans when you consolidate. Leaving out your Perkins Loans will preserve the benefits on those loans.
If you want to lower your monthly payment amount but are concerned about the impact of loan consolidation, you might want to consider deferment or forbearance as options for short-term payment relief, or consider switching to an income-driven repayment plan for longer-term payment relief.
Once your loans are combined into a Direct Consolidation Loan, they cannot be removed. The loans that were consolidated are paid off and no longer exist.
Student loan consolidation calculator
How to use this consolidation calculator
Step 1: Enter details about your federal and private student loans. You’ll need your loan balance, interest rate and monthly payment. You can estimate, but your result will be more accurate if you have specifics handy.
Step 2: Understand what you currently owe. You’ll see a total of all your loan balances and payments, plus the weighted average interest rate for all loans. Use this information to compare interest rates and monthly payments.
Step 3: Choose an option to lower your payments. Each option will change your interest rate, monthly payment or repayment term:
- If you’re consolidating federal loans, you may see a lower monthly payment and longer repayment schedule.
- If you’re refinancing student loans, a lower interest rate will save you money. The best rates go to borrowers with good or excellent credit.
- Income-driven repayment plans are for borrowers who have a large amount of debt compared to their income. These programs may mean substantially lower payments, but a longer repayment timeline and more accrued interest, too.
Step 4: Try multiple scenarios. Keep in mind that refinancing with a private lender can help lower your payments for both your federal and private student loans, while the other options will only affect your federal loans. The best approach for you may be a combination of two or even all three.
