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Pros & Cons to Federal Loan Consolidation

Pros & Cons to Loan Consolidation:

A Direct Consolidation Loan allows you to consolidate (combine) multiple federal education loans into one loan. The result is a single monthly payment instead of multiple payments. Loan consolidation can also give you access to additional loan repayment plans and forgiveness programs. Speak to a Certified Student Loan Professional™ to see if a Direct Consolidation is right for your student loan plan.


  • If you currently have federal student loans that are with different loan servicers, consolidation can greatly simplify loan repayment by giving you a single loan with just one monthly bill.

  • Consolidation can lower your monthly payment by giving you a longer period of time (up to 30 years) to repay your loans.

  • If you consolidate loans other than Direct Loans, it may give you access to additional income-driven repayment plan options and Public Service Loan Forgiveness. (Direct Loans are from the William D. Ford Federal Direct Loan Program.)

  • You’ll be able to switch any variable-rate loans you have to a fixed interest rate: the new fixed interest rate will be calculated by taking the average of all consolidated interest rates, rounded to the nearest 1/8th of a percent.


  • Interest capitalizes: Capitalization is when unpaid interest is added to your loan principal. From that point on, interest accrues on the "new" principal balance.

  • Because consolidation usually increases the period of time you to have to repay your loans, you might make more payments and pay more in interest than would be the case if you don’t consolidate.

  • Consolidation may also cause you to lose certain borrower benefits—such as interest subsidies or some loan cancellation benefits—that are associated with your current loans.

  • If you’re paying your current loans under an income-driven repayment plan, or if you’ve made qualifying payments toward Public Service Loan Forgiveness, consolidating your current loans will cause you to lose credit for any payments made toward income-driven repayment plan forgiveness or Public Service Loan Forgiveness.

  • No do-overs - consolidation is not reversible once the Direct Consolidation loan is accepted by you.

Speak to a Certified Student Loan Professional™ to see if a Direct Consolidation is right for your student loan repayment plan.

Meagan Landress, CSLP®

Certified Student Loan Professional™

Financial Coach Meagan

MRLandress, Inc.


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