It is not uncommon for a student to borrow funds to pay for their education. Sometimes, students (or other borrowers for that student) may pursue loans from several lenders. When this happens, it may be a bit confusing to remember when to pay each one. Consolidating student loans may be an option. Learning how to consolidate student loans may help you to make the perfect decision for your needs. Financial aid may be available to those who qualify. What Is Loan Consolidation? Loan consolidation allows students to combine several individual loans into one. This may be due to federal student loans. When rolled into one payment, the loan may have a single fixed interest rate. The rate for that consolidation loan is typically the average of all of the loans consolidated. The end result is the student has one monthly payment to make instead of several. What to Know Before Consolidating Loans Making the decision to consolidate student loans takes careful consideration of key aspects of this process. Consolidation may not always be the perfect decision for all borrowers. Take a moment to gather all information about your existing loans. Consider the type of loan, interest rate, and the length of time you’ve been paying it. Then, consider these factors. Payments may go down. However, you may extend the length of time you pay off the loan. Do you have unpaid interest on the loan? If so, the principal balance – the amount you have to pay back – may go up. Interest rates change. If you consolidate your loans into one, your new interest rate may be higher than it was on some of your loans. Are you working towards income-driven repayment forgiveness of your student loans? Sometimes, consolidation may mean you lose credit for the payments you made toward this program. (Be sure to check the details of any consolidation offer for this.) It may be possible not to consolidate all of the student loans you have. You may wish to keep one out of the mix, for example, if the interest rate is significantly lower or for other reasons. Where to Consolidate Student Loans If you have federal student loans, you may be able to consolidate using the Federal Direct Consolidation Loan Application and Promissory Note. To do this, you simply log into StudentAid.gov and finish the process. During the process, you choose which loans you wish to consolidate. You agree to repay your new loan. Then, you learn what your monthly payment is and how to begin repayment of the loan. There is no application fee for using this service. You may be able to consolidate these types of loans without cost. This process takes about 30 minutes to finish. Should You Consider Consolidating with Private Lenders? It may be possible to consolidate a federal student loan into a private loan. Keep in mind that, as a borrower through the U.S. Department of Education, you have specific rights. These may no longer apply if you consolidate into a private loan. Sometimes, you may wish to consolidate into a private loan because the costs may be lower. However, the terms and conditions may be significantly different and may or may not fit your needs. If you decide to go this route, it may be a great idea to look at the differences between these loans to your federal loans. Some of the benefits you may lose include: Access to deferment or forbearance programs, a type of temporary loan relief when facing hardshipsAccess to repayment plans based on income (for those that offer forgiveness after repayment of 20 to 25 years) Public Service Loan Forgiveness, total and permanent disability discharge, borrower defense to repayment discharge, and other factors What Are Some of the Benefits of Consolidating Student Loans? Each loan situation is different. It is up to you to determine if one loan program is the perfect solution for your needs or not. You may find some potential benefits when refinancing, such as: Simpler repayment with only making one payment per month on your loanSome monthly payments may be lower if you take more time to repay the loanYou may be able to switch variable rate loans into a fixed rate At the same time, consider the potential downsides to the process, such as: You may have to repay your debt longer, which means there may be more time for interest to accumulate on the loanWhen consolidating, outstanding interest on these loans may be a part of the original principal balance You may lose some borrower benefits when you consolidate Take the time to compare several options before making a decision. For many people, consolidating is one of the perks of using federal student loans to pay for your college education.