Consolidating your student loans can be a wise decision which can save you money every month and help you pay off your student loans quicker.

Student Loan Consolidation is taking all the student loans you have and combining them into one loan with one interest rate and one payment.

Say you have 3 student loans:

* Loan Balance Rate Payment
1 Sallie Mae $10,000 7% $200
2 Bank Loan $6,500 8% $150
3 University Loan $3,500 6% $90
4 New Loan $20,000 6% $350

In this case you would take loans 1,2 and 3, combined them all together to come up with Loan 4.  This would save you money every month and save you money over the long term because you are paying less interest.

Student Loan Consolidation Fees and Interest Rates

Typically student loan consolidation does not include upfront fees.  Depending on the interest rate of the loans you are paying off a calculation is made to determine the new interest rate.  This calculation is usually about the average of all your other interest rates.  The calculation also takes into account the balance of each loan.  When they determine your new interest rate an eighth of a percent is usually added on top.

Who Can Consolidate a Student Loan

Only loans from the same person can be consolidated by that person.  Parents and students cannot consolidate separate loans together, neither can married couples consolidate separate student loans together.

Parents can consolidate PLUS loans at any time, but there are limitations to when students can consolidate. During the initial grace period you can consolidate or when the loan has entered repayment.  Students cannot consolidate loans when they are still in school.

Further Information

Any education loan can be consolidated by any lender, you have the choice.


We recommend looking into many financial institutions to determine the best possible deal to you.  Remember it is not always beneficial to consolidate your student loans.  Crunch the numbers to be sure you will save money in the short term and/or the long term before signing the papers.

*This is a hypothetical chart meant only as an example.