Should I Consolidate my Student Loans?

If you are graduating or otherwise leaving Penn State with student loan debt, you will soon begin making student loan payments. You most likely have more than one loan, and each will come with its own monthly bill. Depending on your situation, consolidating your loans may make repayment easier or lower your monthly payments.

Federal Direct Consolidation Loans

If you have multiple federal student loans, you can consolidate them into a single Federal Direct Consolidation Loan. You may want to keep the following considerations in mind:

  • There is no fee to consolidate (so make sure you avoid companies offering to consolidate your federal loans for a fee).
  • The interest rate is the weighted average of the interest rates of the loans you are consolidating, rounded up to the nearest one-eighth of 1% (e.g. 5.798% would be rounded up to 5.875%).
  • You can consolidate federal loans that are in their grace period, in repayment, or on in-school deferment after a period of repayment.
  • Private loans cannot be consolidated with federal loans.
  • Federal loans, including Direct Consolidation Loans, are only available to students in the United States.

Advantages and Disadvantages


  • It can be easier to plan and keep track of payments, with multiple monthly loan payments combined into one.
  • Depending on the terms of the original loans, consolidating may provide benefits such as additional payment plans or a fixed interest rate.
  • In some cases, consolidating gives you the option of lowering your monthly payments by extending the repayment period to a maximum of 30 years.


  • You may lose benefits that you had with your original loans, such as better interest rates, debt cancellation benefits, or interest subsidies.
  • If you are extending the payment period, you will pay more interest over the life of the loan.
  • Consolidation is permanent.

How to Consolidate Student Loans

Most students can apply for a Direct Consolidation Loan at The website will first determine if you are able to consolidate and explain the appropriate consolidation process. Then you will have the opportunity to select which loans to consolidate, select your loan servicer and repayment plan, and complete the forms to accept financial responsibility.

If your loans are still in a grace period (the period in which you do not need to make payments on a loan), you will have the option to delay consolidation until the grace period has ended so that you do not lose this benefit.

Resources to Help You Decide if Consolidation is Right for You

You can learn more about Direct Consolidation Loans at the Federal Student Aid website, and view your current federal loans at The National Student Loan Data System website. You can also seek advice from your current loan servicer(s).

If you would like to lower your monthly loan payments but not consolidate your loans, you may have the option to switch payment plans on your current loans or request deferment or forbearance.


Penn State World Campus students can contact the Office of Student Aid at 800-252-3592 or