Young woman at table refinancing her student loans.

A Guide to Consolidating Student Loans

Updated December 27, 2019 . AmFam Team

Too many student loans? Consider consolidating them with our tools and resources. Get started today with this how-to guide.

Going to college is a great way to further your potential — it opens the door to careers and expands your horizons. And if you’re like most Americans who earned a college diploma, you came out of school with student loan debt. When you consolidate your student loans, you combine multiple loans into one. We have some tips to help you get started.

Consolidating vs. Refinancing

When you refinance a student loan, you are transferring your education debt to a new lender, often with a lower interest rate and repayment schedule. You can refinance both federal and private loans, and you may be able to get a lower monthly payment. Consolidating your student loans isn’t the same thing. If you consolidate your loans through the federal government, you may qualify for loan forgiveness or income-related payment plans, but you won’t get a lower interest rate.

How Do I Consolidate My Student Loans?

Okay, so now that you know a little bit about student loan consolidation, how do you do it? There are two types of student loans: federal and private. It can be a little confusing because the way you handle these loans is different. Here are step-by-step guides for both.

Federal student loan consolidation

When you consolidate federal loans, the government pays off your individual debts and replaces them with a direct consolidation loan. You’re typically eligible for this when you graduate, leave school or drop below half-time enrollment.

  • Go to and choose “Complete Consolidation Loan Application and Promissory Note.”
  • Enter which federal loans you want to consolidate.
  • Choose a repayment plan. You’ll either get a plan that ties payments to your income, or a timeline based on your loan balance.
  • Keep making your regular student loan payments until your servicer confirms the consolidation has gone through. You don’t want to miss a payment on accident.

Private student loan consolidation

Sometimes called refinancing, private student loan consolidation means rolling multiple loans into a single new private loan. These loans are made through financial institutions, not the federal government, so your credit score and income will come into play. You usually need a credit score at least in the upper 600s to qualify. Rates vary from 2% to more than 9%.

  • Take an inventory of all of your student loans so you have a clear picture of what you owe.
  • Shop around to compare offers from a few different lenders. That way, you can find the best fit for your situation.
  • Once you decide on a lender, contact them to get started on the consolidation process.
  • Make sure you understand the fine print. For private loans, an 18% fee could be added to your principal (which means you have more debt, not less). You might be stuck with a higher interest rate. And you can’t “unconsolidate” your loan. Once it’s done, it’s done.

Consolidating your student loans could be the first step in becoming debt free. Learn more about how working to become debt free can help you achieve your goals.

This article is for informational purposes only and based on information that is widely available. This information does not, and is not intended to, constitute legal or financial advice. You should contact a professional for advice specific to your situation.

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