What is Student Loan Consolidation?

The American government allows students the opportunity to combine many education loans into a single loan which helps to decrease their monthly payments to one affordable one that provides the borrower access to other loan repayment plans and forgiveness programs. Consolidation is an option that is available to students who have already completed their degree who are making their loan repayments and have an excellent payment history. Currently, three federal student loans can be consolidated – Stafford Loans, PLUS Loans, and Federal Perkins Loans.

Whether you should consolidate your loans is dependent on your individual needs but these are some benefits and risks that are worth knowing before you take that financial plunge.


  • The most known advantage of consolidation is how it can simplify your loan repayment by leaving you with a less worrisome single bill at the end of the month.
  • It can extend your monthly repayment by up to thirty years which gives you sufficient time to pay your loan while focusing on advancing in your career after getting your degree.
  • You can get the option to have a fixed interest rate instead of a variable interest rate.


  • Extending your monthly repayment means that there is a probability of paying for a longer period of time and increasing your interest on your principal loan amount.
  • Interest accumulated from other loans that is outstanding forms part of the interest of the consolidated loan. This can cause an exorbitant increase on the interest amount that you would have paid had you not chosen to consolidate your loans.
  • Benefits such as discounts on interest rates, principal rebates, and other cancellation benefits that are associated with your loans could become obsolete when you consolidate.

There are other loan relief options that you can consider if you are worried about losing your benefits or increasing your interest should you consolidate your loan such as deferment or forbearance. These are short term relief measures that suspend your loan repayments for a specific period of time. Unfortunately, if you have a private student loan, it cannot be consolidated but a viable option to change your payment plan would be refinancing it. Consolidation has the following requirements before it is granted.

  • The loans need to be in repayment.
  • The general rule is that existing consolidation cannot be consolidated but there are exceptions such as adding an eligible loan as part of the consolidation.
  • A loan that has been garnished by the court cannot be consolidated.

Nowadays, education is an expensive yet essential part of life. Student loans offer people who do not have the financial resources to attain a prosperous future that will help to alleviate the financial crisis that they are faced with. Debt consolidation is a beneficial option that a person can utilize to lessen their financial burdens.