Consolidating your student loans can seem like an attractive idea. After all, one payment may be a lot easier to manage than several. While there are many student loan repayment strategies on the market, debt consolidation is one of the most common.

Before you jump head-first, it’s important to understand how student loan consolidation works . Consolidation works differently if you have federal loans, private loans, or a mix of both. Let’s discuss everything you need to know before applying for student loan consolidation.

What is student loan consolidation?

When you consolidate your student loans, you combine all your separate student loans and pay them off as a single new loan. Depending on the types of loans you have and your financial goals, you may choose to consolidate through a federal Direct Consolidation Loan with the U.S. Department of Education, or with a private lender as part of a refinancing process.

Borrowers tend to consolidate loans in an effort to simplify their student loan repayment plan. Instead of making multiple loan payments to different lenders, you can consolidate all of your student debt into a single loan. Depending on the type of loan you have, this process can potentially lead to lower monthly payments, different repayment terms, and more.

Consolidating federal student loans

Here’s how this process works: When you consolidate, the government turns your existing federal student loans into a single Direct Consolidation Loan.

However, it’s important to know that the interest rate on your Direct Consolidation Loan is not always lower. Instead, the rate is calculated by taking the weighted average of the interest rates on your existing loans and then rounding up to the nearest one-eighth of 1%. This new rate is fixed for the life of the loan.

How to consolidate federal student loans

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You’ll need to have your Federal Student Aid (FSA) ID handy. (Don’t remember your ID? You can find it here .)

When you’re ready, complete the application online or by calling the Federal Loan Consolidation Information Call Center at 1-800-557-7392. It takes at least 30 minutes to complete the application. If you use the online application, you’ll see this screen, from which you need to log in with your ID.

Using Federal Student Aid’s Repayment Estimator , you can see what your monthly payment would be on each of the income-driven repayment plans. You can also call your loan servicer and ask which plan could save you the most money over the life of your loan or lower your monthly payment.

Typically, the first payment of your consolidated loan will need to be made within 60 days. IMPORTANT: Until your loan servicer contacts you with a due date and instructions for payment, keep making payments on your old loans.

Consolidating private student loans

Have private student loans that you’d like to consolidate? You might be wondering if private consolidation is even possible. It is, but you have to go about it a different way.

The truth is you can’t consolidate private student loans through the federal government. Instead, you consolidate your loans refinancing through a private lender. Like federal the weblink consolidation, student loan refinancing allows you to combine your loans into a single monthly bill. Essentially, refinancing is when you take out a new loan with new loan terms to pay off your existing debt.

This strategy will also work if you have a mix of both federal and private student loans; You can refinance your federal loans through a private servicer as well.