A-to-Z Index

Loan Consolidation

Loan Consolidation is the process of combining multiple student or parent loans into one new loan with a new repayment term, interest rate and monthly payment.

FFELP Consolidation Loan

In the Family Federal Education Loan Program (FFELP), borrowers attain federally-guaranteed student loans through a private bank.

***We currently do not know of private lenders offering consolidation for federal loans. If you are interested in consolidating your federal loans with the federal government, please review the information below.***

Direct Consolidation Loan

Benefits of Direct Consolidation Loan:

  • One lender (U.S. Dept of Education) and one monthly payment (easier to manage debt)
  • Consolidation is free
  • No minimum amount is required to qualify
  • Reduced monthly payments

Who is eligible for a Direct Consolidation Loan?

  • Borrowers must have at least one Direct or FFEL Loan that is in grace, repayment, deferment or default status. Loans in an in-school status cannot be consolidated.

Borrowers who do not have Direct Loans may be eligible for a Direct Consolidation Loan if:

  • They include at least one FFEL Loan and have been unable to obtain a federal consolidation loan with a FFEL consolidation lender OR
  • Have been unable to obtain a federal consolidation loan with income-sensitive repayment terms acceptable to them OR
  • Intend to apply for loan forgiveness under the Public Service Loan Forgiveness Program

There are three forms to complete:

  1. Direct Consolidation Loan Application
  2. Direct Consolidation Loan Promissory Note
  3. Repayment Plan Selection Form

**these forms can be completed online at http: www.loanconsolidation.ed.gov


Six Steps to calculate the interest rate of a Direct Consolidation Loan:

  1. Multiply each loan by its interest rate to determine the "per loan weight factor"
  2. Add the "per loan weight factors" together
  3. Add the loan amounts together
  4. Divide the "total per loan weight factor" by the "total loan amount" and then multiply by 100
  5.  Total per loan weight factor    X   100  = Weighted Average Rate

           Total Loan Amount

  6. Round the result of Step 4 to the nearest higher 1/8th of one percent if it is not already on an eighth of a percent.
  7. Compare the result of Step 5 with the interest rate cap of 8.25%. The fixed interest rate on the Direct Consolidation Loan will be the lower of the two

OR, you may use the calculator below:


Loan Consolidation Calculator:



For Additional Information about Direct Consolidation Loans:

Web - www.loanconsolidation.ed.gov

Phone - 1(800)557-7392 [8am-8pm, Mon-Fri]

Mail - U.S. Department of Education

            Consolidation Department

            P.O. Box 242800

            Louisville, KY 40224-2800