There are certain “pros” (advantages) to combining your existing federal student loans into a Direct Consolidation Loan.

  • A Direct Consolidation Loan might reduce your total monthly payment amount. This can ease the strain on your monthly budget.
  • One way to get of default on your federal student loans is to consolidate them into a Direct Consolidation Loan. After you consolidate, the loans come out of default status and you’ll be current on the loans.
  • If you combine your existing federal student loans into a Direct Consolidation Loan, you’ll get a fixed interest rate for the entire life of the loan. (For some people, this is preferable to having variable rate loans where the monthly payment can change from time to time.)
  • If you have lots of federal student loans, having one Direct Consolidation Loan rather than multiple loans usually makes it easier to manage your debt. This is because you’ll only have to remember to make one payment each month, rather than many payments.
  • If you consolidate under the Direct Consolidation Loan program, you might be able to take advantage of a repayment option that wasn’t previously available to you. For example, available repayment options under the Direct Consolidation Loan program include a standard repayment plan, a graduated repayment plan, an extended repayment plan, the Income-Contingent Repayment (ICR) Plan, the Pay As You Earn Repayment Plan, and an Income-Based Repayment (IBR) Plan, in most instances.
  • If you consolidate under the Direct Consolidation Loan program, you might be able to take advantage of loan forgiveness options that you previously didn’t have. For example, your remaining loan balance is forgiven if you make 25 years of qualifying monthly payments on an IBR or ICR Plan, or 20 years for the Pay As You Earn Repayment Plan (or for new borrowers on the IBR plan).
  • Direct Consolidation Loans are eligible for the Public Service Loan Forgiveness (PSLF) program, whereas federal loans originated under the FFEL program or the Perkins loan program are not. This means that if you consolidate these types of loans into a new Direct Consolidation Loan, you can qualify for PSLF under certain circumstances. To obtain this benefit, you must make 120 qualifying payments on the new Direct Consolidation Loan and be employed in a full-time public service job.

If you have questions about a potential Direct Consolidation Loan, contact the Loan Consolidation Information Call Center at 1-800-557-7392.