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Consolidating federal student loans—Unsubsidized, Subsidized—may help you manage your debt with a fixed interest rate and a single monthly payment.

How It Works

With loan consolidation, you combine your federal loans into a single loan at a fixed interest rate. You can't consolidate loans with your spouse. Also, you can't consolidate private loans with your federal loans.

Your fixed interest rate is determined by taking a weighted average of your loan rates rounded up to the nearest 1/8 of 1%. There is no cap on the interest rate of a Direct Consolidation Loan.


  • 1 monthly payment
  • Longer repayment period
  • Possible lower monthly payments
  • Payment flexibility with deferment and forbearance options available
  • No credit checks (except PLUS loan consolidation may require credit check)
  • No fees or prepayment penalties
  • Fixed interest rate


  • Total cost is higher due to longer repayment period
  • Repayment begins immediately after consolidation
  • Possibility of higher interest rates
  • Could lose benefits such as subsidized interest, deferment, or loan forgiveness

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