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Q&A: Should I Consolidate My Student Loans?

Managing lots of student loans can be overwhelming. Consolidating them might seem like the obvious choice, however you want to be careful. Be sure to know the exact terms of your current loans, including interest rates and any perks they may offer. Also know that federal and private loans often can’t be consolidated together.

Should I Consolidate My Student LoansQ: I’m a 22-year-old college student about to graduate with an insane amount of debt. My loans come from multiple lenders and I was wondering: Would it be smart — or at least possible — to take out a consolidation student loan from a bank or credit union and pay my loans with that big loan so I only have one payment each month? — Heather

A: Student loan consolidation is worth a look, but proceed with caution. Although lumping myriad loans into one may be easier to manage and can provide other benefits — such as releasing a cosigner — you don’t want to lose benefits that some of your existing student loans may offer. And, although consolidation can lock in a fixed interest rate, providing protection if rates go up, you’ll be stuck with the higher APR if rates dip.

If you have a combination of federally-guaranteed student loans (Stafford and Perkins loans are common examples) and private loans, you may not be able to consolidate all loans under one roof. In most cases, federal student loans are eligible for consolidation and private loans can be consolidated, but not both together.

For federal student loans, start with your loan servicers, who may offer or be able to recommend consolidation options. If you’re unsure what kinds of federal loans you have, visit You’ll need your FAFSA PIN which you can retrieve here:

Whether you qualify will depend on your credit worthiness, employment situation, and the size of your loans. Some lenders may cap how much they’ll lend for consolidation. In the meantime, the best approach is to get organized with your loans via a spreadsheet or a free online tool to track interest rates, due dates, grace periods, and payments. If you have several student loans, is a new app that can help you get to that level of organization.

Good luck!

Related: Find out how much you could save by refinancing your student loans.

Occasionally I publish answers to selected readers’ money questions. I welcome your opinion in the comments. Send questions to

Published or updated on August 1, 2012

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About David Weliver

David Weliver is the founding editor of Money Under 30. He's a cited authority on personal finance and the unique money issues we face during our first two decades as adults. He lives in Maine with his wife and two children.


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  1. Suzan says:

    I think your answer is exactly right. Consolidation isn’t for everyone, but it can’t hurt to look into. Lately consolidation has gotten a bad name because there have been many scams in recent years involving consolidation companies. However, there are still companies out there with impressive reputations. As you should do with any major decisions involving companies, check the BBB as a reference. Research, research, research.

  2. Kelly says:

    When I was getting serious about paying my student loans back, I looked into consolidation and found that my interest rate would go up if I consolidated. It would’ve been more convenient to have them all lumped in together, but it would have prolonged what I was trying to do, and I ultimately decided it wasn’t worth it. When you research your options, be sure to look at all of the aspects of each option! Good luck!

  3. Nick says:

    To the point about having a variable interest rate: interest rates are about as low as they will most likely ever be. (See the Fed funds and discount rate of just about zero). I would lock in a fixed rate if I could and wouldn’t worry about rates going down!

  4. Emily says:

    This is a great question. My fiancé and i combined have a little less than $150,000 in school loans. We both have our master degrees. We live in a modest apartment, are both employed and save frugaally each month. Even though we both have good credit scores (high 700s) I worry about what happens when we want to apply for a mortgage. How will our school debt influence our future and what are the best steps to not let this harm us?

    • Mark says:

      Unless you have very high incomes, your debt to income ratio will be very high, making it harder to get a mortgage at a decent rate. I bought a house a few months ago, and the impression I got was that as long as you had 20% down you could get a loan, but having a lower debt to income ratio would probably help you get a better interest rate.

      My advice would be to pay down the loans but also make sure you build up a down payment when you get closer to buying a house.

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