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What Is Loan Consolidation?

Federal student loan borrowers have the option of consolidating their loans via the Direct Consolidation Loan program offered by the U.S. Department of Education.

Consolidating allows you to merge multiple eligible loans into a single loan. That loan is then serviced by the servicer of your choosing – of which Nelnet is one!

Read on for more information about loan consolidation and why you may want to consider consolidating your federal student loans.

Is Consolidation Right for You?

Before you consolidate, review the following benefits and considerations.


If you consolidate, you may benefit from certain federal student loan advantages, including:

  • One servicer, one statement, one payment.

    You'll no longer have to keep up with multiple loans, due dates, and payment amounts.

  • No consolidation fee.

    There is no fee to apply for a Direct Consolidation Loan.

  • Take care of your past due loans.

    When you apply for consolidation, you may also be eligible for a temporary forbearance — while your new loan is processed — to bring your qualifying past due loans current.

  • Lower monthly payments via access to several different repayment plans.

    You can choose from multiple repayment plans* with various terms to repay your consolidation loan. Saving on a Valuable Education (SAVE, formerly the REPAYE Plan), Pay As You Earn (PAYE), Income-Based Repayment (IBR), and Income-Contingent Repayment (ICR) plans offer flexibility and lower payments based on your income and family size. You may be able to change plans at any time, based on eligibility requirements. Visit to estimate your monthly payment under various repayment options.

    *Consolidation loans that include one or more parent PLUS loans are only eligible for the ICR plan.

  • Public Service Loan Forgiveness (PSLF) eligibility.

    Consolidation loans are eligible for loan forgiveness under the PSLF Program if you meet additional program requirements. The PSLF Program forgives your remaining debt if you make 120 qualifying payments while working full-time for a qualifying non-profit or government employer.

    Please note: if you consolidate your loans, only qualifying payments that you make on the new Direct Consolidation Loan can be counted toward the 120 payments required for PSLF.* Any payments you made on the loans before you consolidated them don’t count. If you are including one or more eligible Direct Loans in your Direct Consolidation loan request, you should be aware that you will lose credit toward the required 120 payments for PSLF on any qualifying payments you have already made on those Direct Loans. You can contact us with questions.

    *There is one temporary exception. If you have Federal Family Education Loan Program loans and you apply to consolidate into the Direct Loan Program before the end of 2023, you may receive credit for prior payments under a one-time payment count adjustment for eligible borrowers. See for more information.


If you're looking to consolidate, you should consider the following:

  • Interest rate.

    The interest rate on a consolidation loan is the weighted average of the interest rates on the underlying loans, rounded to the nearest 1/8th of a percent, so your overall interest rate may be slightly higher.

  • Paying more over the long term.

    With a consolidation loan, you often make payments over a longer period of time, causing you to pay more interest over the life of the loan.

  • Your grace period.

    If any of your loans are in a grace period and you want to consolidate them, make sure to note on your application the date the grace period ends. Otherwise, your consolidation application will be processed right away and you’ll lose your grace period.

  • Direct Parent PLUS loan eligibility.

    Direct Parent PLUS loans are not eligible to be combined into a consolidation loan under the Pay As You Earn or Income-Based Repayment (IBR) plans.

  • Loss of certain federal student loan benefits.

    If you’re in the military and active duty begins after your consolidation date, you may no longer be eligible for some military benefits.

    Also, as stated above, under PSLF Program rules, if you consolidate loans that would be eligible for PSLF, only qualifying payments that you make on the new Direct Consolidation Loan can be counted toward the 120 payments required for PSLF. Any payments you made on the loans before you consolidated them don’t count. You can contact us with questions.

Are You Eligible?

Have you done one of the following?

  • Graduated
  • Left school or temporarily withdrawn from classes
  • Dropped below half-time status

Do you have one of these eligible loan types?

  • Direct Subsidized and Unsubsidized Loans
  • FFELP (Federal Family Education Loan Program) Subsidized and Unsubsidized Loans
  • FFELP PLUS Loans
  • Direct PLUS Loans
  • Perkins and Federal Nursing Loans
  • Health Education Assistance Loans (HEAL)
  • Supplemental Loans for Students (SLS)

Other factors to be aware of:

  • Private loans are not eligible to be consolidated in the Direct Loan Consolidation Program.
  • Spousal consolidations (federal student loans you and your spouse consolidated into one consolidation loan) are not eligible to be consolidated in the Direct Loan Consolidation Program.

    Please note that on October 11, 2022, the Joint Consolidation Loan Separation Act was signed into law to allow joint (spousal) consolidation loan borrowers to separate their joint loan obligations into new individual Direct Consolidation Loans. Learn more about separating a joint consolidation loan. Borrowers may request that their loans be placed into forbearance status until the joint consolidation separation process is implemented.

  • A PLUS loan made to the parent of a dependent student cannot be transferred to the student through consolidation.

If it looks like consolidation will work for you, it's easy to apply:

Note: Just remember, you must continue making payments after submitting your application until you receive notice from your servicer that underlying loans have been paid off. You have the option to select the servicer of your choice (of which, Nelnet is an option).

Adding Loans to Your Direct Consolidation Loans

After your new Direct Consolidation Loan is complete, you may still add more eligible loans to your existing consolidation. If you would like to add other eligible loans, your servicer must receive your Request to Add Loans Form ( hoja en español) within 180 days from the date your Direct Consolidation Loan is completed (originated).

If you choose Nelnet to originate and service your Direct Consolidation Loan, you may request to add other eligible loans to it by completing the Request to Add Loans Form ( hoja en español) and send it to Nelnet via email, or mail to:


P.O. Box 82658

Lincoln, NE 68501-2658

Good to know:

  • If you have more than seven loans to add to your consolidation loan, you will need to submit more than one Request to Add Loans Form.
  • If it has been more than 180 days since your consolidation loan was completed, you will need to complete a new Direct Loan Consolidation application to add other student loans.

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