On its face, student loan consolidation sounds smart: Combine your federal loans so you have a single monthly payment to keep track of, rather than paying separate bills to different servicers. Our guide to consolidation will help you understand what it is, who it’s meant for, whether it’s the right choice for you, and how to apply. Consolidating has both benefits and drawbacks, and because “consolidating” is sometimes used interchangeably with “refinancing,” it can be easy to confuse the two terms.You’ll get a new interest rate, which is the weighted average of all your prior loans’ rates rounded up to the nearest one-eighth of 1%.(If the average comes to 4.26%, for instance, your new interest rate will be 4.375%.) Interest rates on direct loans are fixed, so your interest rate won’t change while you’re paying off the loan.
The government will assign you a new repayment schedule based on your total federal loan balance when you apply for consolidation.Consolidate your loans through or by calling the federal Loan Consolidation Information Call Center at 1-800-557-7392.