Back to Blog Home

Consolidating Student Loans

April 1, 2025
  • Money Management
  • Debt
Pin This
Post This

Consolidating Student Loans infographic.

Consolidating Student Loans

Graduating from college is a huge accomplishment and is the start to the rest of your life. Unfortunately, for many people, that college degree also means costly student loan debt. One way to reduce your student loan debt is through loan consolidation.

6.8 million federal student loan borrowers have loans in default1
$1.7 trillion in outstanding debt from student loans in the U.S. alone2
2.3 million borrowers over the age of 62 are still paying off student loans3

Student Loan Consolidation 1014

Combine multiple federal education loans into one loan
Once you consolidate, the federal government will issue your new loan for the same amount of your old ones
Pay one single payment on a larger loan rather than several smaller loans

Comparing Loan Consolidation to Student Loan Refinancing5

Consolidation 

What it does: Combines multiple federal loans into one federal loan
Loans that can be combined: Federal loans only
Ability to use federal loan protections, repayment options, and forgiveness programs: Yes
Type of interest: Fixed
Credit requirement: None

Refinancing 

What it does: Combines private and/or federal loans into one private loan
Loans that can be combined: Private and/or federal loans
Ability to use federal loan protections, repayment options, and forgiveness programs: No
Type of interest: Fixed
Credit requirement: Typically, a score between 650 and 680

Why Consolidate Your Student Loans?6

  • Lower your monthly payment by extending your repayment term to up to 30 years
  • Consolidation may help you qualify for beneficial federal programs
  • If you don't qualify for income driven plans (loans that are comparable to your income, family size, state, or federal loan type) or loan forgiveness, you can still consolidate
  • Consolidation is completely free
  • Simplify expenses to one monthly payment

Do I Qualify for Student Loan Consolidation?

For defaulted loans (loans that haven't been paid off fully for 270 days or more), you must make 3 consecutive monthly payments on the loan prior to consolidating, or you must pick an alternative repayment plan7

You can't consolidate an existing consolidation loan unless you include an additional eligible loan in the consolidation (Under certain circumstances, you may reconsolidate an existing FEEL Consolidation Loan without including any additional loans.)8

If loans are private and not federal, you need to meet the following qualifications9:

  • Have at least a 650 credit score
  • Have lower than 50% debt-to-income ratio
  • Make at least $24,000/year (have proof of a stable income)

The loans you wish to consolidate must already be in a repayment/grace period10

How to Consolidate Student Loans

  • Log in to www.studentloans.gov and click on “Complete Consolidation Loan Application and Promissory Note.”
  • Enter the loans you do (and don’t) want to consolidate.
  • Choose your repayment plan (balance-driven or income-driven)
  • Pick a timeframe of when to pay off your new loan
  • Pay attention to the interest, the lower the rate the better
  • Before submitting your form, make sure you carefully ready the terms of conditions
  • Continue making student loan payments as usual until you are approved


Consolidating student loans can help get you on track to starting your life debt-free. Visit www.studentloans.gov for more information.

Sources: 
Nerdwallet, USNews, Studentloans, Studentloanhero, FederalStudentAid, StudentDebt Relief, GreatLakes, Debt.org, TheSimpleDollar

Links:
1,2https://www.consumeraffairs.com/finance/what-percent-of-student-loans-are-in-default.html#:~:text=Deaults%20and%20delinquencies%20on%20student%20loans%20impact%20millions%20of%20Americans.&text=Education%20Department%20data%20shows%20that,the%20total%20number%20of%20borrowers.
3https://www.cnbc.com/select/average-student-loan-debt-balance-borrowers-62-older/
4https://studentaid.gov/manage-loans/consolidation
5https://www.nerdwallet.com/article/loans/student-loans/student-loan-consolidation-myths
6https://studentaid.gov/manage-loans/consolidation
7https://fsapartners.ed.gov/sites/default/files/2021-03/0203SLGCh6Consolidating.pdf
8,9https://www.bankrate.com/loans/student-loans/private-student-loan-requirements/#requirements
10https://studentaid.gov/help-center/answers/article/what-are-the-requirements-to-consolidate-loan

Dominion Energy Credit Union®

Visit DominionEnergyCU.org for more information