Federal Student Loan

Frequently Asked Questions

When can I consolidate my loans?

Generally, you are eligible to consolidate after you graduate, leave school, or drop below half-time enrollment.

What are the requirements to consolidate a loan?

Here are some of the eligibility requirements for receiving a Direct Consolidation Loan:

  • The loans you consolidate must be in repayment or in the grace period.

  • Generally, you cannot consolidate an existing consolidation loan unless you include an additional eligible loan in the consolidation.

  • Under certain circumstances, you may re-consolidate an existing FFEL Consolidation Loan without including any additional loans. These circumstances are explained in the Federal Direct Consolidation Loan Application and Promissory Note.

  • If you want to consolidate a defaulted loan, you must either make satisfactory repayment arrangements (defined as three consecutive monthly payments) on the loan before you consolidate, or you must agree to repay your new Direct Consolidation Loan under the

    • Income-Based Repayment Plan,

    • Pay As You Earn Repayment Plan,

    • Revised Pay As You Earn Repayment Plan, or

    • Income-Contingent Repayment Plan.

  • If you want to consolidate a defaulted loan that is being collected through garnishment of your wages, or that is being collected in accordance with a court order after a judgment was obtained against you, you cannot consolidate the loan unless the wage garnishment order has been lifted or the judgment has been vacated.

What is the interest rate on a consolidation loan?

A Direct Consolidation Loan has a fixed interest rate for the life of the loan. The fixed rate is the weighted average of the interest rates on the loans being consolidated, rounded up to the nearest one-eighth of one percent. There is no cap on the interest rate of a Direct Consolidation Loan.

When do I begin repayment?

Repayment of a Direct Consolidation Loan will begin within 60 days after the loan is disbursed (paid out). Your loan servicer will let you know when the first payment is due. 

If any of the loans you want to consolidate are still in the grace period, you have the option of indicating on your Direct Consolidation Loan application that you want the servicer that is processing your application to delay the consolidation of your loans until closer to the grace period end date. If you select this option, you won’t have to begin making payments on your new Direct Consolidation Loan until closer to the end of the grace period on your current loans.

Are there different repayment plans?

Borrowers have different needs, so there are several repayment plans—including income-driven repayment plans, which base your monthly payment amount on your income and family size. You’ll select a repayment plan when you apply for a Direct Consolidation Loan.

Direct Consolidation Loan

A federal loan made by the U.S. Department of Education that allows you to combine one or more federal student loans into one new loan. As a result of consolidation, you will have to make only one ...


The process of combining one or more loans into a single new loan.


Forgiveness, cancellation, and discharge all refer to the cancellation of a borrower's obligation to repay all or a portion of the remaining principal and interest owed on a student loan, but are generally used in different contexts.

"Loan cancellation" and "loan forgiveness" generally refer to the cancellation of a borrower's obligation to repay some or all of the remaining amount owed on a loan if the borrower works full-time for a specified period of time in certain occupations or for certain types of employers. "Loan cancellation" is usually used in reference to the various Perkins Loan Program cancellation benefits. "Loan forgiveness" is usually used in reference to the Direct Loan and FFEL Teacher Loan Forgiveness Program or the Direct Loan Public Service Loan Forgiveness Program. Borrowers are not required to pay income tax on loan amounts that are canceled or forgiven based on qualifying employment. 

"Loan discharge" generally refers to the cancellation of a borrower's obligation to repay some or all of the remaining amount owed on a loan due to circumstances such as school closure, a school's false certification of a borrower's eligibility to receive a loan, a school's failure to pay a required loan refund, or the borrower's death, total and permanent disability, or bankruptcy. In some cases, a discharge may also entitle a borrower to receive a refund of payments previously made on a loan. Depending on the type of discharge, the amount of a loan that is discharged may be treated as taxable income.


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